After the spectacular 4% rally last week, Gold (XAU/USD) started out a fresh week on a strong footing, holding close to the highest levels in two-months above $1960 this Monday. American media networks called a Biden victory in the presidential election over the weekend, which sent the risk assets spiraling through the roof despite a split Congress already priced-in by the market.

Markets believe that a divided government could likely refrain from the regulatory changes and higher taxes while the President-election Joe Biden could push for additional fiscal stimulus, with a deal most likely seen in December. The Fed is also anticipated to do more to support the economic recovery. Therefore, with more funds in the market, the inflation-hedge gold is likely to benefit, strengthening the recent bullish case.

Although the rising coronavirus cases globally, with the total tally topping 10 million in the US, remain a cause for concerns, which could limit the downside in the safe-haven US dollar, in turn capping the gains in the yellow metal. The sentiment on Wall Street will also remain in focus for fresh gold trades.

Gold: Short-tern technical outlook

Hourly chart

(Click on image to enlarge)

The path of least resistance for the bright metal appears to the upside. However, the rising wedge hurdle on the hourly chart at $1965 remains a tough nut to crack for the XAU bulls.

A sustained move above the latter could open doors towards September 18 highs of $1973.64. Acceptance above which could bring the $2000 level back in sight.

The spot trades above all the major hourly moving averages (HMA) while the Relative Strength Index (RSI) trends higher at 64.47, suggesting that the bullish bias remains intact.

To the downside, the bulls need to defend the 21-HMA at $1954, below which the rising trendline support at $1947 could be tested. Further down, the upward-sloping 50-HMA at $1941 also remains on sellers’ radars.