Gold clings to gains near one-week tops, comfortably above $2000 mark

• Gold gained follow-through traction for the second consecutive session on Tuesday.
• The prevalent USD selling bias, sliding US bond yields remained supportive of the uptick.
• Reluctance to place aggressive bets might cap gains ahead of Wednesday’s FOMC minutes.

Gold edged higher through the first half of the European trading action and was last seen hovering near the top end of its daily range, around the $2008-10 region, or one-week high.

A combination of factors assisted the precious metal to gain some follow-through traction for the second consecutive session and build on its recent strong rebound from the $1863-62 region, or three-week lows set last Wednesday.

The impasse over the next round of the US fiscal stimulus has been fueling concerns about the US economic recovery. This, in turn, forced investors to continued dumping the US dollar and underpinned the dollar-denominated commodity.

The greenback was further pressured by sliding US Treasury bond yields, which provided an additional boost to the non-yielding yellow metal. Apart from this, escalating US-China tensions benefitted the precious metal’s safe-haven status.

The US Commerce Department on Monday tightened restrictions on Huawei’s access to commercially available chips. The news restrictions were in addition to those announced by the US in May, adding 38 Huawei affiliates in 21 countries to an economic blacklist.

The momentum pushed the commodity back above the key $2000 psychological mark, which prompted some technical buying and contributed to the intraday positive move. However, it will be prudent to wait for some strong follow-through buying before placing fresh bullish bets.

Investors now look forward to the US economic docket for some short-term trading impetus. The key focus will remain on Wednesday’s release of the latest FOMC meeting minutes, which will help investors determine the next leg of a directional move.

Technical levels to watch