- The prevalent USD selling bias assisted gold to gain some traction for the second straight day.
- The upbeat market mood might keep a lid on any strong gains for the safe-haven commodity.
- Market participants now look to the ECB decision and the US jobless claims for a fresh impetus.
Gold edged higher through the early European session and is currently placed near the top end of its daily trading range, around the $1720 region.
The precious metal gained some positive traction for the second consecutive session on Thursday and extended its steady ascent from the $1690 horizontal support tested earlier this week.
The US dollar remained depressed on the back of Wednesday’s dismal US GDP report and the FOMC policy update. This, in turn, was seen as a key factor underpinning the dollar-denominated commodity.
It is worth recalling that the advance US GDP report showed that the economy contracted sharply by 4.8% during the first quarter of 2020, worse than consensus estimates pointing to 4.0% fall.
Adding to this, the Fed cautioned that the negative impact from the coronavirus pandemic could prolong in the medium term and also showed readiness to ease monetary policy further if needed.
Despite the supporting factors, the uptick lacked any strong bullish conviction amid the prevalent risk-on mood, which tends to weigh on the precious metal’s perceived safe-haven status.
The global risk sentiment remained well supported the latest optimism over the re-opening of economies in some parts and successful stage 1 clinical trial of a drug to treat the Covid-19.
Given the upbeat market mood, it remains to be seen if the commodity is able to capitalize on the attempted positive move or runs into some fresh supply at higher levels.
Later during the early North-American session, the release of Initial Weekly Jobless Claims data from the US might influence the USD price dynamics and provide some meaningful trading impetus.
In the meantime, the outcome of the European Central Bank (ECB) meeting might infuse some volatility in the markets and assist market participants to grab some short-term trading opportunities.
Technical levels to watch
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