- Gold staged a modest recovery from YTD tops set in the previous day.
- Sliding US bond yields undermined the USD and remained supportive.
- The uptick seems limited amid optimism about the economic recovery.
Gold built on its steady intraday positive move through the first half of the European session and refreshed daily tops, around the $1790 region in the last hour, albeit lacked follow-through.
A combination of factors assisted the precious metal to catch some bids on Thursday and recover a part of the previous day’s losses to two-and-half month lows, around the $1770 region. Wednesday’s FOMC meeting minutes reaffirmed the Fed’s ultra-accommodative monetary policy stance and led to a modest pullback in the US Treasury bond yields. This, in turn, drove some flows towards the non-yielding yellow metal.
Retreating US bond yields prompted undermined the US dollar, which extended some additional support to the dollar-denominated commodity. Apart from this, a cautious mood – as depicted by a softer tone around the equity markets – further benefitted the safe-haven XAU/USD and remained supportive of the intraday positive move. That said, optimism over a strong global economic recovery capped the upside for the commodity.
The global risk sentiment remained well supported by the impressive pace of vaccinations for the highly contagious coronavirus disease and the slowing pace of infections. This, along with the progress in the US President Joe Biden’s $1.9 trillion stimulus package, has been fueling the optimism about the economic outlook. This makes it prudent to wait for some follow-through buying before positioning for any further gains.
Market participants now look forward to the US economic docket, featuring Philly Fed Manufacturing Index, the usual Initial Weekly Jobless Claims and housing market data. Traders might further take cues from the US bond yield dynamics, which will play a key role in influencing the USD price dynamics and produce some short-term opportunities around the XAU/USD.
Technical levels to watch
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