- The prevalent upbeat market mood exerted some pressure on the safe-haven gold.
- Sustained USD selling bias extended some support and helped limit deeper losses.
- Investors now eye this week’s FOMC policy meeting for a fresh directional impetus.
Gold remained depressed through the early North American session, albeit has managed to trim a part of its intraday losses to near two-week lows. The commodity was last seen trading around the $1826 region, down around 0.80% for the day.
The precious metal witnessed some fresh selling on the first day of a new week and finally broke down of a two-day-old trading range amid the prevalent upbeat market mood. The global risk sentiment remained well supported by the latest optimism over the rollout of vaccines for the highly contagious coronavirus disease.
Apart from this, the extension of Brexit negotiations beyond Sunday’s deadlines and hopes for additional US fiscal stimulus further boosted investors’ confidence. This, in turn, was seen as one of the key factors that undermined demand for traditional safe-haven assets and exerted some downward pressure on the XAU/USD.
The risk-on mood was further reinforced by a strong pickup in the US Treasury bond yields, which further collaborated towards driving some flows away from the non-yielding yellow metal. However, sustained US dollar selling bias extended some support and helped limit the downside for the dollar-denominated commodity.
Meanwhile, the intraday downfall took along some short-term trading stops near the $1824-22 region. However, the lack of any strong follow-through selling warrants some caution for aggressive bearish traders and positioning for any further depreciating move amid absent relevant market moving economic releases from the US.
In the meantime, traders might continue to take cues from the broader market risk sentiment. This, along with the US stimulus headlines, will influence the USD price dynamics and produce some short-term trading opportunities around the XAU/USD. The key focus, however, will remain on the FOMC policy meeting on December 15-16.
Technical levels to watch
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