- The prevalent risk-on mood exerted some pressure on the safe-haven precious metal.
- Concerns over worsening US-China relations, surging COVID-19 cases helped limit losses.
- Weaker USD extended some additional support, warranting caution for bearish traders.
Gold traded with a mild negative bias through the early European session, albeit has still managed to hold above the $1800 mark.
The precious metal failed to capitalize on the previous day’s goodish intraday bounce from one-week lows and witnessed a modest pullback from the $1810-11 resistance zone. The prevalent risk-on environment was seen as one of the key factors that undermined demand for traditional safe-haven assets and exerted some pressure on the safe-haven commodity.
The global risk sentiment remained well supported by the latest optimism over a potential vaccine for the highly contagious coronavirus disease. The upbeat market mood was evident from strong gains in the equity markets. However, the downside seemed cushioned amid concerns over the continuous surge in COVID-19 cases globally and worsening US-China relations.
It is worth reporting that the US President Donald Trump signed a bill, sanctioning Chinese officials involved in enacting Hong Kong’s national security laws. Trump also signed an executive order that ends Hong Kong’s preferential trade status. China was quick to respond and threatened to impose retaliatory sanctions against US individuals/entities.
This coupled with the emergence of some fresh US dollar selling extended some additional support to the dollar-denominated commodity and should help limit any deeper losses, at least for the time being. This makes it prudent to wait for some strong follow-through selling before traders start positioning for any meaningful corrective slide.
Market participants now look forward to the US economic docket, highlighting the release of Empire State Manufacturing Index and Industrial Production. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.
Technical levels to watch
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