Gold continues to trade with a risk positive bias, and so as sentiment improves picks up again, gold is pulling higher. However, the broad sense of consolidation is still playing out and decisive direction is yet to be found. We continue to look at US fiscal stimulus and the outlook for the dollar to be key for gold.
We continue to wait for gold to make its decisive next move. However, there are slight hints that its main correlations (the dollar, and recently the resumption of Treasury yields) are moving in the right direction for the gold bulls. However, there is still plenty to resolve for US fiscal stimulus to be ratified, and so we would remain cautious for the sustained direction of gold.
After an uncertain end to last week for the dollar, there is a gradual weakening coming back in again this morning. This is helping to usher gold higher. Even though the strong negative correction is just easing slightly, we still see dollar moves as being key for moves on gold. A weaker dollar is gold positive. The US Dollar Index falling consistently under 93.50 and back towards 93.00 would certainly help the gold bulls.