- Gold regained positive traction on Friday amid a modest USD pullback.
- The underlying bullish sentiment might cap further gains for the metal.
- Investors might refrain from placing fresh bets ahead of the NFP report.
Gold caught some fresh bids during the early European session and jumped to intraday highs, around the $1811 region in the last hour.
The precious metal regained some positive traction on the last day of the week and recovered a part of the overnight slump to the $1785 region – the lowest level in more than two months. The latest leg of a sudden spike could be attributed to the emergence of some US dollar selling, which tends to underpin demand for the dollar-denominated commodity.
Meanwhile, the USD pullback lacked any obvious fundamental catalyst and might still be categorized as profit-taking amid a softer tone surrounding the US Treasury bond yields. That said, expectations for a strong economic recovery – amid prospects for a massive fiscal stimulus and progress in coronavirus vaccinations – might help limit the USD downside.
This, along with the underlying bullish sentiment in the financial markets, cap gains for the safe-haven XAU/USD. Investors might also refrain from placing any aggressive bets, rather prefer to remain on the sidelines ahead of Friday’s release of the closely-watched US monthly jobs report (NFP), due later during the early North American session.
This makes it prudent to wait for some strong follow-through buying before confirming that the commodity has bottomed out. Hence, any subsequent appreciating move is more likely to confront a stiff resistance and run out of the steam near the $1823-25 horizontal resistance zone.
Technical levels to watch
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