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  • The prevalent USD selling bias assisted gold to regain positive traction on Thursday.
  • The upbeat market mood might cap the upside ahead of the FOMC policy update.

Gold edged higher through the early European session and climbed to fresh two-week tops, around the $1917 region in the last hour.

Following the previous day’s good two-way price swings, the precious metal managed to regain positive traction on Thursday and was being supported by a softer tone surrounding the US dollar. The anticipated victory for the Democratic candidate Joe Biden kept the USD bulls on the defensive, which, in turn, was seen as a key factor that benefitted the dollar-denominated commodity.

Meanwhile, the incumbent President Donald Trump has already pursued lawsuits and a recount in key battleground states that he narrowly lost. This comes on the back of the fact that the outcome still hangs on the vote count from a few remaining swing states. The heightened uncertainty could prolong for days or even weeks and extended some additional support to the safe-haven gold.

Apart from this, the ongoing slide in the US Treasury bond yields further contributed towards driving some flows towards the non-yielding yellow metal. That said, the failure of a so-called Democrat Blue Wave in the US Congress dampened prospects for big stimulus packages to aid the COVID-19 hit economy. This, along with the upbeat market mood might keep a lid on any further gains for the XAU/USD.

Investors might also be reluctant to place any aggressive bets, rather prefer to wait on the sidelines ahead of the latest FOMC monetary policy update, scheduled to be announced later during the US session. In the meantime, the release of the usual Initial Weekly Jobless Claims data from the US will be looked upon for some short-term trading opportunities.

Technical levels to watch