- Gold gained some follow-through traction for the second consecutive session on Monday.
- A subdued USD demand, the US political uncertainty provided a minor lift to the commodity.
- Indications of a strong opening in the US equity markets might keep a lid on any further gains.
Gold maintained its bid tone through the early North American session and shot to three-day tops in the last hour, with bulls now eyeing a move to reclaim the $1900 mark.
The US dollar struggled to preserve its early gains, instead witnessed a modest pullback from one-month tops, which, in turn, extended some support to the dollar-denominated commodity. Adding to this, growing wariness about the actual outcome of the US presidential election prompted traders to hedge their bets and provided an additional boost to the safe-haven commodity.
However, a strong rebound in the global risk sentiment – as depicted by indications of a strong opening in the US equity markets – undermined the demand for the safe-haven precious metal. This might act as the only negative factor capping the upside for the XAU/USD. This makes it prudent to wait for some strong follow-through buying before positioning for any further gains.
From a technical perspective, the XAU/USD was last seen hovering near the 100-day SMA support breakpoint, around the $1892-93 region. Any subsequent positive move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the $1903-05 congestion zone, further warrant caution for aggressive bullish traders.
That said, the downside is likely to remain cushioned ahead of Tuesday’s US election. The outcome is likely to infuse volatility in the global financial markets and produce some meaningful trading opportunities. In the meantime, Monday’s release of the US ISM Manufacturing PMI will be looked upon for some short-term trading opportunities.
Technical levels to watch
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