Gold Price Analysis: XAU/USD consolidates around two-week high above $1,850 amid cautious sentiment

• Gold wavers in the $10 choppy range after rising to highest in two weeks the previous day.
• Risks sour amid uncertainty over Brexit, US stimulus and US-China tussle.
• Surging virus cases, mixed news on vaccines also weigh the mood.
• Updates on stimulus from the US, Japan, coupled with Brexit and virus headlines, can entertain gold traders.

Having witnessed multiple days of a slow grind to the north, gold prices managed to cross the $1,850/51 upside barrier on Monday. However, a lack of buying interest, or cautious optimism, might have stopped the bulls to keep the reins afterward, which in-turn caps the bullion prices within the $1,858-68 range, currently around $1,863 during early Tuesday’s Asian trading.

Although fresh challenges to the risks and the US dollar’s bounce off multi-month low can be cited as major catalysts for the yellow metal’s latest corrective pullback, bulls’ optimism amid vaccine and stimulus hopes challenge the upside momentum.

Trade, Brexit and stimulus mark trifecta impact on risks…

With the Trump administration’s latest sanctions over 14 Chinese officials, due to the Hong Kong crackdown, Beijing is less likely to retreat on its earlier warning to take firm actions if the US moves forward with punitive measures over its diplomats. Not only the Sino-American tension but China’s gradual hardships to Australia also signal upcoming trade/political tension.

On the other hand, the UK and the European Union (EU) leaders again fail to reach any Brexit agreement while the talks are likely to continue until Wednesday. Fisheries, level playing field and governance are the tough stands while the British government’s refrain from moving forward on the Internal Market Bill (IMB), for now, offers hopes of positive talks.

It should also be noted that the US and Japanese policymakers are struggling to announce the much-awaited stimulus to battle the coronavirus (COVID-19). Furthermore, vaccines are up and ready to hit the markets but the US will get less of them Pfizer as the global leader in the vaccine is already occupied with overseas orders.

Against this backdrop, Wall Street closed mixed while S&P 500 Futures look for a clear direction near the record high.

Moving on, risk catalysts are likely to keep the driver’s seat amid a light calendar. Though final readings of the Q3 2020 GDP from Japan and Europe can entertain the gold traders. Anyfurther worsening of the risk catalysts can keep the gold buyers hopeful.

Technical analysis

A clear break of the early-November low near $1,850 enables the bulls to aim for a 50-day SMA level of $1,878. Though, any pullback below the $1,850 immediate support will take rest near 21-day SMA near $1,845 before recalling the bears.