Despite some level of dip buying this Wednesday as price dropped initially to session lows, gold price action on the XAUUSD chart is showing signs of bullish exhaustion, as the dip-buys have so far failed to take the yellow metal beyond the $1954 resistance level.
The initial dip-buying occurred as markets raised bets of a Democratic sweep of the Georgia Senate runoff elections, which paves the way for a Democratic control of the US executive and legislature. A Democrat-controlled Senate provides a smooth path for President-Elect Joe Biden to add additional stimulus without much resistance, which could create a USD-negative environment.
Recent clampdowns and mass arrests in Hong Kong as well as the chances of a tougher stance by the Democrats on tech companies has led to a safe-haven push to gold, but this appears to be a weak factor at the moment.
Key data scheduled for Wednesday are the ADP Employment Change (consensus of 60K, previous 307K) and the release of the FOMC minutes.
Technical Levels to Watch
The ascent of gold prices on the XAUUSD daily chart has stalled at the 1954.77 resistance, with the formation of a doji candle. This candle is still active, and if it remains as it is, this could indicate some bit of bullish exhaustion.
A breakdown of today’s intraday lows at the 1940.15 support level, allows for a pullback towards 1918.68, with 1900.76 and 1881.99 serving as additional downside targets.
On the other hand, 1969.95 becomes feasible if bulls are able to take gold prices beyond 1954.77. 1980.74 and 2008.04 are expected to be future upside targets for bullish price action.
Gold Price (XAUUSD) Daily Chart
