Yellow metal is seeing very little action on Monday, as the dollar index and US Treasury yields are consolidating. The dollar index, gold’s biggest nemesis, is currently side lined near 90.22, and the 10-year US Treasury yield is hovering near 1.09% for the seventh straight day.

Most of the analysts believe that the path of least resistance for the dollar is to the lower side, as markets expect massive US fiscal spending under Joe Biden’s Presidency. With that being the case, gold’s broader outlook looks bullish.

Elsewhere, President Joe Biden’s administration tried to head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive on a Sunday call. Lachlan Shaw, National Australia Bank’s head of commodity research said that “We’re seeing bigger question marks over the passage of Biden’s stimulus package, Senate Republicans are starting to stand a bit more objectionable with particular parts of the package.”

“So it does raise the question about the speed and the timing of the package. (Although,) some of the issues of the vaccine delays in the U.S. are perhaps tilting the balance in odds of favour of that stimulus,” Shaw added.

Favoring the yellow metal, Demand for physical gold picked up last week as the approaching Chinese New Year encouraged buyers in China and Singapore. Speculators reduced their bullish positions in COMEX gold and silver contracts in the week to Jan. 19, data showed.

But the yellow metal might face some selling pressure in the short-run if coronavirus fears destabilize global equities, drawing bids for the weakened US dollar.

XAU/USD 4 Hour Chart:

Support: 1838.4 (S1), 1821.1 (S2), 1804.9 (S3).

Resistance: 1871.8 (R1), 1888.0 (R2), 1905.2 (R3).

Amidst the catalysts creating short term pressure on the yellow metal, we expect a short term bearish trend for XAU/USD.