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  • The prevalent USD selling bias assisted gold to gain some traction on Monday.
  • The upbeat market mood, amid COVID-19 vaccine optimism, capped the upside.

Gold traded with a mild positive bias through the early European session, albeit lacked any strong follow-through buying. The commodity was last seen trading around the $1870 level, nearly unchanged for the day.

The precious metal managed to gain some positive traction on the first day of a new trading week and was being supported by the prevalent selling bias surrounding the US dollar. However, a combination of factors held bulls from placing any aggressive bets and kept a lid on any meaningful upside for gold.

The US dollar remained depressed on the back of speculations for additional monetary easing by the Fed amid concerns about the economic fallout from the imposition of new COVID-19 restrictions in several US states. This, in turn, was seen as a key factor that benefitted the dollar-denominated commodity.

That said, the latest optimism over a potential vaccine for the highly contagious coronavirus disease remained supportive of the prevalent upbeat market mood. The risk-on flow undermined demand for traditional safe-haven assets and capped the upside for the XAU/USD, at least for the time being.

Market participants now look forward to the release of the flash version of the US Manufacturing and Services PMIs for some impetus. The key focus, however, will remain on Wednesday’s FOMC meeting minutes, which will determine the next leg of a directional move for the non-yielding yellow metal.

Technical levels to watch