Gold Price Analysis: XAU/USD drops below $1,900 ahead of US data
- XAU/USD is trading in a tight range below $1,900 on Thursday.
- Wall Street looks to open the day deep in the red.
- US Dollar Index climbs to fresh weekly highs above 93.70.
The XAU/USD pair closed modestly higher above $1,900 on Wednesday but struggled to push higher on Thursday as souring market sentiment helped the USD gather strength. As of writing, the pair was down 0.35% on a daily basis at $1,895.20.
USD capitalizes on risk aversion
The lack of progress in the US stimulus negotiations and renewed fears over the surging number of coronavirus cases causing nationwide lockdowns in Europe weigh on risk sentiment on Thursday.
Reflecting the dismal market mood, major European equity indexes are losing between 1.75% and 2.7% on the day. Meanwhile, the S&P 500 futures are down nearly 1%, suggesting that Wall Street's main indexes are likely to start the day deep in the negative territory.
If risk-off flows continue to dominate the financial markets in the second half of the day, the greenback could preserve its strength and force XAU/USD to push lower. At the moment, the US Dollar Index (DXY) is at a fresh weekly high of 93.73, gaining 0.35% on the day.
The US economic docket will feature NY Empire State Manufacturing Index, weekly Initial Jobless Claims and Philadelphia Fed Manufacturing Survey data on Thursday. However, investors are likely to ignore these reports and remain focused on risk perception.
Technical levels to watch for