- Gold gained some positive traction on Thursday, albeit lacked any strong follow-through.
- A softer risk tone, sliding US bond yields, weaker USD extended some support to the metal.
- The lack of strong follow-through warrants some caution before placing fresh bullish bets.
Gold traded with a mild positive bias through the early European session and was last seen hovering near daily tops, just above the $1870 level.
A combination of supporting factors assisted the precious metal to regain some positive traction on Thursday and recover a major part of the previous day’s modest losses. Despite a promising development in late-stage COVID-19 vaccine trials, investors remain concerned about the potential economic fallout from the imposition of stricter restrictions to curb the outbreak. The nervousness took its toll on the global risk sentiment and benefitted safe-haven assets, including gold.
The global flight to safety was reinforced by a steep decline in the US Treasury bond yields, which further drove some additional flows towards the non-yielding yellow metal. Adding to this, reviving hopes for additional US fiscal stimulus measures to support the economy kept the US dollar bulls on the defensive and underpinned demand for the dollar-denominated commodity.
That said, the uptick lacked any strong follow-through buying and the XAU/USD remained confined in a three-day-old trading range. Given this week’s sharp pullback from the $1965 region, the range-bound price action could be categorized as a consolidation phase. The commodity’s inability to register any meaningful recovery further indicates that the selling bias is far from being over.
Market participants now look forward to Thursday’s US economic docket, highlighting the releases of the latest consumer inflation figures and Initial Weekly Jobless Claims. This, along with the broader market risk sentiment, will influence the XAU/USD price dynamics and assist traders to grab some meaningful trading opportunities.
Technical levels to watch
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