Gold prices stalling in $1700s surrounding by critical technicals

• Gold is on backfoot for a third straight session as risk appetite picks up.
• Eyes on the Federal Open Market Committee's monetary policy statement due on Wednesday this week.
• US virus case topples 1 million, a grim milestone. 

Gold is trading -0.26% between $1,692.31 and $1,716.52 at $1,706.85 with a more stable backdrop in financial and commodity markets and the VIX in decline. Consequently, Gold futures have also been on the backfoot for a third straight session decline while markets look to nations reopening their economies following weeks of COVID-19 shutdowns. 

However, the number of confirmed coronavirus cases in the United States topped 1 million on Tuesday as researchers say the number of deaths could rise in coming weeks. There are at least 1,002,498 cases of the virus across the US, according to the John Hopkins University. Meanwhile, some governors are moving forward with reopening their economies and US equities are riding the optimism.

Fundamentally, not much has changed in the past week but there is a sentiment brewing that the light at the end of the tunnel could be a lot sooner than expected, according to markets at least. The Safe havens are feeling the turn in sentiment and gold is embarking on a test of a key support line below a critical bearish structure on the charts as global equities pick up the bid.

"While a sharp recovery in equity prices could constrain safe-haven demand for gold, ultimately, we argue that the monetary impulse will remain the primary driver of investment demand for the yellow metal. The balance of risks remains to the upside for gold," analysts at TD Securities argued, however. "That being said, while we expect some marginal CTA selling flow in response to the deteriorating momentum, we don't expect any significant changes in trend follower positioning."

Fed in focus

Meanwhile, markets will be looking to the Federal Open Market Committee's monetary policy statement due on Wednesday this week. The US dollar will be a focus but the Fed has already moved aggressively on the funds rate, QE, and lending programs. This means that there may not be too much activity in the markets around a status quo outcome. However, the tone will almost certainly remain dovish although any optimism about the economy getting back to work could hamstring the price of gold as investors discount the market's anxiety within the price. 

Gold levels

Meanwhile, gold is anchored in the 1700s, -0.46% at the time of writing and submerged below a double top on the hourly charts. the price has been climbing along a support structure which is now coming under pressure. A 23.6% Fibonacci opens risk to the 1678 level ahead of critical support at 1635 (a prior resistance and the 38.2% Fibo f the same range).