The precious metal prices have managed to stop their modest early-day losses, drawing some mild bids well above the $1,780 level, as the fresh weakness of the broad-based US dollar tends to underpin the [[gold]] prices. As gold is denominated in US dollars, its price is often inversely linked to the value of the US dollar. Despite this, bullion is struggling to find any clear direction, due to a lack of essential data/events and cautiously hopeful markets ahead of the release of the key US Consumer Price Index (CPI) data on Friday.

The market appears to be upbeat due to a lack of prominent virus-related deaths and anticipation of the discovery of a cure for the new COVID-19 strain. This favors the gold prices, but the recent rise in US inflation expectations, as assessed by the 10-year breakeven inflation rate according to the St. Louis Federal Reserve (FED), is putting downward pressure on gold prices, as are higher US yields. The XAU/USD is currently trading at 1,781.56, and consolidating in the range between 1,776.95 and 1,782.89.

Despite a lack of significant data or events, the market appears to be positive, due to a lack of prominent virus-related deaths and the expectation of finding a cure for the COVID-19 strain. After reports that Omicron patients are only experiencing minor symptoms, the global risk mood calmed. This assuaged investor concerns about the  economic implications of the new coronavirus variant and restored investor confidence, as seen by a positive tone in the stock market. Furthermore, the Ratio Requirement (RR) actions of the People’s Bank of China (PBOCReserve), coupled with Japan’s willingness to provide unprecedented stimulus, aided the trading attitude on the market. As a result, US Treasury rates and stock futures are maintaining their gains from the beginning of the week, while the US Dollar Index (DXY) has fallen 0.05 percent to 96.23 intraday.

On the USD front, the muted US dollar price action was considered one of the primary factors that helped gold prices to stay bid. As the optimistic market mood tends to undermine the safe-haven dollar, the broad-based US dollar failed to prolong its early-day gains and lost some traction. Investors have appreciated news from South Africa that the exponential surge in Omicron infections has not been accompanied by a significant wave of hospitalizations, even though there is still much mystery about Omicron’s ramifications on health and economy. As a result, the [[gold]] price is supported by the bearish tendency in the US dollar.

Short-term gold moves may be limited by the lack of significant data/events, at least until Friday’s US Consumer Price Index (CPI) release. Following that, the Federal Reserve’s meeting next week will be key to follow.