Gold clings to intraday gains near session tops, around $1940 area

• Gold witnessed an intraday short-covering move from three-week lows.
• A modest USD pullback underpinned the dollar-denominated commodity.
• A combination of factors kept a lid on any strong gains for the yellow metal.

Gold held on to its goodish recovery gains through the early North American session and was last seen hovering near the top end of its daily range, around the $1940 region.

The precious metal witnessed a dramatic turnaround on Wednesday and rallied around $85-90 from the $1863-62 area, or three-week lows. The US dollar struggled to capitalize on its early gains, instead witnessed a modest pullback and was seen as one of the key factors that led to some aggressive short-covering move around the dollar-denominated commodity.

Despite hopes of a US economic recovery, the impasse over the next round of the US fiscal stimulus measures exerted some pressure on the greenback. Even Wednesday’s hotter-than-expected US consumer inflation figures for July to impress the USD bulls or provide any impetus or provide any meaningful impetus, albeit a combination of factors capped gains for the commodity.

A strong rally in the equity markets, amid optimism over a potential vaccine for the highly contagious coronavirus disease, undermined the precious metal’s safe-haven demand. This comes amid some follow-through pickup in the US Treasury bond yields, which further collaborated towards capping gains for the non-yielding yellow metal, at least for the time being.

Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further gains and the resumption of the commodity’s prior/well-established bullish trend to record highs, set last Friday.

Technical levels to watch