- Coronavirus jitters, geopolitical tensions extended some support to the safe-haven commodity.
- The uptick lacked any strong follow-through and remained below the $1735 level, weekly tops.
- The near-term technical set-up supports prospects for a move towards the $1745 supply zone.
Gold extended its sideways consolidative price action through the early European session and remained confined in a range below the $1730 level.
Investors remain concerns over the rising number of new coronavirus cases in the US and China. This coupled with geopolitical tensions in Asian took its toll on the global risk sentiment and benefitted traditional safe-haven assets, including gold.
The anti-risk flow was reinforced by a weaker tone surrounding the US Treasury bond yields, which undermined demand for the US dollar. This, in turn, extended some additional support to the non-yielding yellow metal.
Despite the supporting factors, the commodity lacked any strong bullish conviction and struggled to build on the previous day’s intraday bounce from the $1713-12 region. The metal held well below the weekly tops, around the $1735 level set on Monday.
This makes it prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move. However, the overnight bounce from a two-week-old ascending trend-line supports prospects for a further near-term appreciating move.
Hence, a subsequent positive move towards an intermediate strong resistance, around the $1745 horizontal level, looks a distinct possibility. Some follow-through strength has the potential to lift the commodity back closer to multi-year tops, around the $1765 region.
Moving ahead, market participants now look forward to the US economic docket, featuring the releases of Initial Weekly Jobless Claims and Philly Fed Manufacturing Index. The data might influence the USD price dynamics and produce some trading opportunities around the dollar-denominated commodity.
Technical levels to watch
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