The recent doses of vaccine optimism has tempered with the mood in gold and eventually that led to a break below key support around $1,850 at the start of the week.
The drop saw a push towards $1,800 and the 200-day moving average (blue line) and since then, the selling momentum has paused and price action has largely consolidated around $1,800 to $1,818 over the past few sessions.
Amid the Thanksgiving holiday period, we may not get much answers when it comes to gold ahead of the weekend. Buyers are staving off a further decline for now but the mood is fragile and we'll only get a better sense of things next week.
There hasn't been any real headline push to really offer buyers or sellers anything to work with and that is resulting in some slight consolidation at the key level above.
While vaccine optimism may present further downside risks for gold, the counter-argument is that easy monetary policy that will stay in place for several more years is to provide a supportive factor for the yellow metal in the big picture.
That is leading to a lot of push and pull and a test of buyers' resolve as price leans on $1,800 and the 200-day moving average.
A break below the latter would be the first since the brief dip in March, which was due to the "buy dollar, sell everything" panic. Beyond that, the last time gold traded below both its key daily moving averages was all the way back in 2018.
That said, a further pullback towards the range of $1,700-50 will likely invite another round of dip buying. Looking further out, gold may find it tough to replicate the monstrous rally from below $1,500 to $2,000 again. But that doesn't mean it is headed for a nosedive.
Late December to January seasonality has always been supportive of gold and if the market isn't too heavily focused on any vaccine talk at the time, there's still a good argument for gold to climb especially after a healthy correction.