Today in the Asian trading session, gold managed to stop its overnight declining streak and drew some modest bids around above $1,745 level as the U.S. Federal Reserve kept to a dovish stance in the minutes from its latest policy meeting, which tends to weaken the U.S. dollar and contributes to the yellow-metal gains. The U.S. Federal Reserve failed to give any new catalysts to control the market direction and remained doubtful about the U.S. economic recovery from COVID-19. This was understood as a leading factor that lends some support to the non-yielding yellow metal. On the flip side, the prevalent upbeat market sentiment, backed by the strong pace of coronavirus vaccinations and U.S. President Joe Biden’s infrastructure spending plan, turned out to be one of the critical factors that cap additional gains in GOLD. The yellow metal prices are currently trading at 1,744.30 and consolidating in the range between 1,733.26 and 1,745.45.

It is worth mentioning that the Federal Reserve officials are still cautious about the road to recovery from COVID-19, so they have decided to keep bolstering the U.S. economy until its recovery is more secure. In that way, the U.S. central bank’s latest policy meeting minutes showed that the interest rates would not go high until the U.S. economy recovers appropriately. This was understood as a leading factor that lends some support to the non-yielding yellow metal.

Despite the U.S. Federal Reserve’s dovish stance, the market trading sentiment has been flashing green since the day started amid the long-lasting optimism over a possible vaccine for the highly contagious coronavirus. Moreover, the hopes for U.S. President Joe Biden’s infrastructure spending plan also played its major role in supporting the market trading mood. Besides this, the buying interest around the equity market took further pace following the previous-day released upbeat Eurozone PMI prints, suggesting that business activity is on the way to growth.

At the USD front, the broad-based U.S. dollar failed to extend its overnight bullish bias and turned bearish on the day as the Fed stuck to a dovish stance in the minutes from its latest policy meeting. The central bank promised to continue monetary policy support for the economy until its recovery is more secure. However, the low interest rate tends to undermine the nation’s currency. Meanwhile, the losses in the U.S. dollar were further bolstered by the market’s upbeat mood. Hence, the losses in the U.S. dollar were seen as the critical factor that helps gold prices to stay bid as they are inversely related to the U.S. dollar. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.07% to 92.405 by midnight E.T. (4 AM GMT). On another note, the reason for the bullish bias in the yellow-metal could also be tied to the long-lasting concerns over the coronavirus (COVID-19) and tussles between the U.S. and China. The extended lockdown in Europe and some Asian countries keep challenging the market’s upbeat trading sentiment and contributing to the safe-haven metal gains.

Looking ahead, the market traders will keep their eyes on the release of German Factory Orders and the ECB Monetary Policy Meeting Accounts (minutes). On the other hand, the release of U.S. Initial Weekly Jobless Claims, along with Powell’s speech, will also be key to watch. In addition to this, the U.S. dollar price movement will continue to play.

Daily Support and Resistance
S1 1702.46
S2 1714.93
S3 1721.12
Pivot Point 1727.39
R1 1733.59
R2 1739.86
R3 1752.32

GOLD is trading with a bullish bias at the 1,742 level, facing immediate resistance at the 1,744 level. On the 4 hour timeframe, the XAU/USD is trading in a narrow trading range of 1,744 – 1,730 level. Bullish crossover of 1,744 level can extend buying trend until next target level of 1,754 level and 1,764 area. Whereas, the support continues to stay at 1,733 level. The bearish breakout of 1,733 support level can extend selling bias in gold until 1,721 level. I will be looking to capture a buying position over 1,744 level today. Good luck!