Gold Price Analysis: XAU/USD licks its wounds around $1,850 as dust settles over market frenzy

• Gold bounces off intraday low, prints heaviest losses in a week.
• US dollar regains upside momentum even as risks recover on stimulus hopes, Sino-American news.
• Retail rush fades amid regulations, lack of interest.
• A light calendar can keep traders at bay but social mediate chatters, equity moves should be closely observed.

Gold sellers catch a breather around $1,854, down 0.24% intraday, while marking the biggest loss since January 27 ahead of Tuesday’s European session. The yellow metal seems to bear the burden of the US dollar’s latest recovery moves amid risk-on mood. Also receding market interest in the earlier retail rush to equities and silver favor the gold sellers.

The US dollar index (DXY) extends corrective pullback from 90.83 to currently around 90.93 while trimming losses to 0.10% by press time. The greenback’s upside momentum could be traced to the increased chatters over the US stimulus package as American President Joe Biden praises talks with Republican Senators over the bipartisan relief package.

Also favoring the mood could be China’s readiness to re-establish diplomatic ties with the US as well as receding coronavirus pressure and vaccine optimism.

Against this backdrop, S&P 500 Futures print 0.50% gains while stocks in Asia-Pacific are also mildly bid. Further, the US 10-year Treasury yields look for fresh clues around 1.08% after the previous day’s downbeat performance.

Earlier in the day, CME’s additional margin on silver trading and chatters over Gamestop’s latest weakness favored risks. However, a lack of momentum and the market’s cautious sentiment ahead of Friday’s US NFP, coupled with on-going US aid package negotiations, seems to have superseded the catalysts.

Moving on, a light calendar may keep disappointing market players but qualitative factors shouldn’t be ignored.

Technical analysis

Although an ascending trend line from January 18 restricts gold’s short-term downside around $1,845, bulls are less likely to be convinced unless witnessing a clear break of 100-day SMA near $1,876.