Search ForexCrunch
  • Gold edged higher for the fourth consecutive session on Wednesday amid softer USD.
  • The upbeat market mood, an uptick in the US bond yields kept a lid on any further gains.
  • Investors now look forward to the US consumer inflation figures for some trading impetus.

Gold held on to its modest intraday gains through the early European session and was last seen trading near the $1843-44 region, up around 0.35% for the day.

A softer tone surrounding the US dollar benefitted the dollar-denominated commodity and remained supportive of a positive move for the fourth consecutive session. However, a combination of factors held bulls from placing aggressive bets and capped the upside for the XAU/USD.

The progress in the rollout of COVID-19 vaccines, along with hopes for a massive US fiscal spending, has been fueling expectations for a strong global economic recovery. This, in turn, continued boosting investors’ confidence and kept a lid on any further gains for the safe-haven gold.

Apart from the risk-on mood, developments to fast-track the US President Joe Biden’s proposed $1.9 trillion COVID-19 stimulus package provided a modest lift to the US Treasury bond yields. This could act as another factor that might drive flows away from the non-yielding yellow metal.

This makes it prudent to wait for some follow-through buying, beyond the $1850 region, before positioning for any further appreciating move. The XAU/USD might then extend the recent bounce from the $1785 region, or over two-month lows and aim to test the $1875-76 supply zone.

Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. Traders might further take cues from the broader market risk sentiment, US bond yields and the USD price dynamics for some short-term opportunities around the XAU/USD.

Technical levels to watch