- A subdued USD demand assisted gold to gain traction and move away from one-month lows.
- Rallying US bond yields, underlying bullish sentiment might keep a lid on any strong move up.
Gold edged higher through the Asian session and was last seen hovering near the top end of its daily trading range, around the $1860 region.
The precious metal built on the previous day’s bounce from over one-month lows, around the $1817 region and gained some positive traction during the first half of the trading action on Tuesday. The uptick allowed the XAU/USD to snap four consecutive days of the losing streak, though a combination of factors might keep a lid on any runaway rally.
The US dollar was seen consolidating its recent strong gains, which, in turn, was seen as one of the key factors that extended some support to the dollar-denominated commodity. This, along with political turmoil in Washington and growing market worries about the continuous surge in new coronavirus cases worldwide, further underpinned the safe-haven XAU/USD.
It is worth reporting that House Democrats plan to impeach the US President Donald Trump on Wednesday unless he steps down or is removed before then. That said, the ongoing rally in the US Treasury bond yields – amid hopes for additional US fiscal stimulus – should help revive the USD and cap any meaningful upside for the non-yielding yellow metal.
Meanwhile, expectations that President-elect Joe Biden would push for a multi-trillion-dollar stimulus package remained supportive of the underlying bullish sentiment in the global financial markets. This might further contribute to limit gains for the XAU/USD amid absent relevant market moving economic releases from the US.
Even from a technical perspective, last week’s sustained breakthrough a rising wedge might have already shifted the near-term bias in favour of bearish traders. This further makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD has bottomed out and positioning for any further appreciating move.
Technical levels to watch
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