Global market players are in a dilemma as the key risk catalysts are flashing mixed signals off-late. Fears of strict lock-down conditions hampering the global economic growth seem to favor the bear. Additionally, catalysts likely allegations on US President Donald Trump and Brexit uncertainty are an extra burden on the market’s mood.

As gold bears no interest for holding and is largely priced in USD across the globe, it can be quite sensitive to movements in US government bonds and the Greenback. Further strength in the US Dollar may continue working against its favor, particularly if risk aversion picks up pace in financial markets. At the same time, a flight to safety in the form of buying Treasuries may cushion the downside potential for gold.

US House Speaker Nancy Pelosi believes that the COVID-19 aid package deal is possible considering the Democratic preparation for a new package. House Democrats are drafting a $2.4 trillion stimulus proposal that may pass in the chamber. President Donald Trump has entertained backing a larger stimulus deal than previously. It would also need the Senate’s blessing.

On the other hand, New York Times alleged American President Donald Trump over income tax returns of $750 for 2016 and 2017. However, the Democratic leader termed it as “fake news” while showing strong belief to have tremendous victory in the election.

All eyes at the end of the week turn to the US non-farm payrolls report. Data out of the world’s largest economy continues to outperform economists’ expectations, but this has been by a narrowing margin since the middle of July. Markets are forward-looking, threat over the timeliness of a fiscal package could cast a shadow of doubt over swift economic recovery expectations, undermining another solid NFP report.

Amid all these catalysts, S&P 500 Futures track Friday’s upbeat performance of Wall Street while rising 0.36% to 3,298 by the press time. The risk barometer seems to await clearer signals to extend the latest recovery.

In doing so, the economic calendar may prove to be less helpful, containing no major data/events, while headlines concerning Brexit, pandemic, and US Presidential Election may decide the direction.

XAU/USD 4 Hour Chart:

Support: 1853.0 (S1), 1841.1 (S2), 1830.1 (S3).

Resistance: 1875.9 (R1), 1886.9 (R2), 1898.8 (R3).

Amidst the prevailing risk-prone market sentiment we expect a mixed trend for XAU/USD.