Gold has showed weakened position as the risks remain skewed to the downside heading into the economic data dump slated for release from the US docket. Investors sold-off the safe-haven gold alongside the US dollar amid a risk-on market profile, driven by corona virus vaccine progress, Biden transition and fiscal stimulus hopes.

Reduced US pollical uncertainty and expectations of swifter economic rebound on strong PMIs have dashed hopes of additional stimulus, weighing negatively on the yellow metal.

US President-elect Joe Biden started speaking, firstly for the Irish border and then US unity, after getting the right to receive the President’s Daily Brief, the collection of classified intelligence reports prepared for the president. This suggests that America may now have movements over the much-awaited COVID-19 stimulus before the expiry of the current spending bill on December 11. Also impacting the dollar were calls of ex-Fed Chair Janet Yellen’s role as the upcoming Treasury Secretary as well as downbeat US Consumer Confidence and Richmond Fed Manufacturing data.

Markit’s Purchasing Managers’ Indexes have shown robust growth prospects, thus lowering the chances for additional fiscal and monetary stimulus. Without hopes for a fresh injection of funds

As per the Westpac’s Senior Economist Justin Smirk, gold prices have peaked alongside risk aversion and are seen lower over the next two years. The key notes are Gold to average below $1,760 an ounce by the end of next year and then drop all the way to $1,633 at the end of 2022. The situation will turn around only by mid-2023, when the precious metal will begin to climb and rise to $1,848 by September 2024, according to the long-term forecast. This outlook comes as gold has been on a losing streak amid better economic data and more risk-on sentiment in the marketplace in light of positive COVID-19 vaccine news.

XAU/USD 4 Hour Chart:

Support: 1789.8 (S1), 1775.7 (S2), 1751.2 (S3).

Resistance: 1828.4 (R1), 1852.9 (R2), 1867.0 (R3).

Amidst the catalysts favoring greenback against yellow metal for the time being, we expect a bearish trend for XAU/USD.