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  • Gold continues to find some support ahead of the 200-day SMA, around $1800 mark.
  • A subdued USD demand was seen as a key factor that benefitted the yellow metal.
  • COVID-19 vaccine optimism undermined the safe-haven commodity and capped gains.

Gold has managed to recover an intraday dip to the $1803 region, albeit lacked any strong follow-through buying. The commodity was last seen trading around the $1810 region, nearly unchanged for the day.

A softer tone surrounding the US dollar assisted the dollar-denominated commodity to once again bounce off the $1800 neighbourhood, a support marked by the very important 200-day SMA. However, the optimism over a potential vaccine for the highly contagious coronavirus disease continued denting demand for traditional safe-haven assets and kept a lid on any meaningful move up for the XAU/USD.

The US dollar prolonged its recent downward trajectory and was further pressured by unimpressive US macro data, which raised expectation for more fiscal stimulus from the incoming Biden administration. The greenback was further pressured by a fresh leg down in the US Treasury bond yields, which extended some additional support to the non-yielding yellow metal, though bulls lacked any conviction.

The positive factor, to a larger extent, was offset by the upbeat market mood, which capped the upside for the safe-haven precious metal. The global risk sentiment remained well supported by the progress toward remedies for COVID-19. This, along with the smooth beginning of President-elect Joe Biden’s transition to the White House, boosted investors’ appetited for perceived riskier assets.

From a technical perspective, the commodity’s inability to register any meaningful recovery suggests that the recent selling bias might still be far from being over. In the absence of any major market-moving economic releases, the outlook remains tilted in favour of bearish traders. Hence, any recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out quickly.

Technical levels to watch

 

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