- A weaker USD assisted gold to regain positive traction on Thursday.
- The risk-on mood, surging US bond yields might cap any strong gains.
- Investors might also refrain from placing bets ahead of NFP on Friday.
Gold extended its steady intraday positive move and shot to over one-week tops – levels beyond the key $1900 barrier – during the early North American session.
The regained positive traction on Thursday and built on this week’s goodish rebound from 100-day SMA support, around the $1849-48 region. The uptick marked the third day of a positive move in the previous four and was sponsored by a softer tone surrounding the US dollar, which tends to underpin demand for the dollar-denominated commodity.
The USD remained depressed and failed to gain any respite from mostly upbeat US macro data, showing that Initial Weekly Jobless Claims fell more than anticipated to 837K from 873K previous. Separately, the Core PCE Price Index and Personal Spending data also bettered expectations, negating a slight disappointment from the Personal Income figures.
Against the backdrop of worries about the ever-increasing coronavirus diseases, the uptick was further supported by some hedging bets ahead of Friday’s release of the closely watched US monthly jobs report. The NFP could give a snapshot of the health of the employment picture in the US, which should drive the buck in the near-term.
Meanwhile, hopes that lawmakers in the US could reach a deal before the end of this year boosted investors’ confidence. This was evident from the prevalent upbeat mood around the equity markets. The risk-on flow was further reinforced by a strong pickup in the US Treasury bond yields, which, in turn, might cap gains for the non-yielding yellow metal.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the recent corrective slide is already over and positioning for any further appreciating move. Bulls might then aim to test the next major resistance near the $1925 region.
Technical levels to watch
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