Gold Price Analysis: XAU/USD in bearish consolidation below $1840, remains vulnerable

Gold (XAU/USD) is nursing losses in Tuesday’s Asian trading, having slumped 2% on Monday to reach the lowest levels in four months at $1831. The yello  |  23/11/2020 22:50

• Gold licks its wounds below $1840, not out of the woods yet.
• Vaccine progress, stronger US data hammer gold prices.
• Focus on vaccine updates and risk sentiment for fresh impetus.

Gold (XAU/USD) is nursing losses in Tuesday’s Asian trading, having slumped 2% on Monday to reach the lowest levels in four months at $1831.

The yellow metal fades its recovery attempts above $1840 from multi-month lows, as the bears retain control after the price breached the long-held, critical support at $1850.

The main catalyst behind gold’s breakdown was the unexpectedly strong US Markit Preliminary Manufacturing and Services PMIs for November, which suggested a robust economic recovery from the coronavirus pandemic blow and boosted the US dollar alongside the stocks.

Further, expectations for the rapid rollout of the coronavirus vaccines in the US and the UK combined with promising results of the vaccine trials caused investors to flock to riskier assets at the expense of the traditional safe-haven gold. The UK drugmaker AstraZeneca announced its vaccine has 90% efficacy without any serious side effects.

The vaccine progress back the narrative that life could likely return to normalcy in 2021 and therefore, boost a quicker global economic rebound, which could imply a lesser need for additional fiscal and monetary stimulus – a negative for gold.

Attention now turns towards the US CB Consumer Confidence data due later in the NA session for fresh dollar trades, as markets appear to have shifted their focus back on the fundamentals. In the meantime, the vaccine updates and sentiment on the global markets will continue to play out.

Gold technical levels

The bears could test the multi-month lows of $1831 if the selling resumes. The next critical support awaits at the psychological $1800 level. To the upside, the $1850 level offers immediate resistance. The bulls need to recapture 21-DMA at $1883 to ensure a sustained recovery.

Gold additional levels