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  • Gold witnessed some profit-taking from two-month tops amid a modest USD rebound.
  • Disappointing ADP report capped the attempted USD recovery and helped limit losses.
  • Market participants look forward to the FOMC minutes for a fresh directional impetus.

Gold extended its retracement slide from near two-month tops and refreshed daily lows, around the $1925 region during the early North American session.

The precious metal struggled to capitalize on its early uptick and witnessed an intraday turnaround from the vicinity of the $1960-65 congestion zone. The mentioned region coincides with the 61.8% Fibonacci level of the $2075-$1764 downfall and should act as a key pivotal point for short-term traders.

A modest US dollar rebound from two-and-half-year turned out to be one of the key factors that prompted some selling around the dollar-denominated commodity. The attempted USD recovery lacked any follow-through amid increasing bets on a Democratic victory in the crucial US Senate runoff elections in Georgia.

A ‘blue wave’ will allow the incoming President Joe Biden to pursue his preferred economic policies, including additional stimulus measures and infrastructure spending. This, along with speculations that the Fed will keep interest rates lower for a longer period, kept a lid on any meaningful upside for the greenback.

Meanwhile, Wednesday’s disappointing US ADP report also did little to provide any respite to the USD bulls. The monthly data published this Wednesday showed that employment in the US private sector decreased by 123K in December. The reading worse than November’s reading of 304K and also missed expectations by a big margin.

Apart from this, the prospect of tighter regulations on technology mega-caps triggered a selloff in Nasdaq futures – which plunged nearly 2% in early premarket trading on Wednesday. This was seen as another factor that might lend some support to the safe-haven XAU/USD and helped limit any further losses, at least for now.

Moving ahead, the release of the latest FOMC meeting minutes will be closely scrutinized for clues about the US central bank’s policy outlook. This, in turn, would play a dominant role in influencing the near-term USD price dynamics and assist investors to determine the next leg of a directional move for the non-yielding yellow metal.

Technical levels to watch