- A combination of factors assisted gold to reverse an early dip to the $1936 zone.
- The US political uncertainty weighed on the greenback and remained supportive.
- A modest pullback in the equity markets further benefitted the safe-haven metal.
Gold held steady near multi-week tops, just below the $1960 region through the early North American session and had a rather muted reaction to the US monthly jobs report.
Following an early dip to the $1936 area, the precious metal managed to regain some positive traction on the last trading day of the week and built on the previous session’s strong positive move. The momentum was supported by the prevalent US dollar selling bias, which tends to underpin the dollar-denominated commodity, and got an additional boost from a modest pullback in the equity markets.
The final result of a nail-biting US presidential election remains unclear two days after polls ended on Wednesday and depends on the vote count from few remaining battleground states. The markets, however, have been betting that Democrat candidate Joe Biden will become the next US president. That said, the uncertainty US political landscape continued exerting some pressure on the greenback.
On the economic data front, the NFP report came in to show that the US economy added 638K new jobs in October as compared to 600K expected. Moreover, the previous month’s reading was also revised higher to 672K as against 661K reported earlier. Further details revealed a significant drop in the unemployment rate, which fell to 6.9% from 7.9% previous, albeit failed to impress the USD bulls.
The high degree of uncertainty could prolong amid the possibility of a legal battle. Adding to this, diminishing hopes for large US fiscal stimulus packages to support the economy took its toll on the global risk sentiment. The risk-off mood was evident from a weaker trading sentiment around the US equity futures, which provided an additional boost to the yellow metal’s perceived safe-haven status.
It will now be interesting to see if the XAU/USD can capitalize on the positive move or bulls opt to take some profits off the table. Nevertheless, the focus will remain on US political developments. Apart from this, the broader market risk sentiment will further play a key role in influencing the XAU/USD and assist traders to grab some meaningful opportunities.
Technical levels to watch
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