Gold Price Analysis: XAU/USD refreshes session tops, around $1865 area

• Gold quickly reversed an intraday dip to the $1850 region amid the prevalent cautious mood.
• COVID-19 jitters weighed on investors sentiment and provided a modest lift to the XAU/USD.
• An uptick in the USD might cap gains for the dollar-denominated commodity, at least for now.

Gold rallied around $15-16 during the mid-European session and jumped to fresh daily tops, near the $1865-66 region in the last hour.

The precious metal managed to attract some dip-buying near the $1850 region and was now looking to build on the previous session’s goodish bounce from the $1837 region. Investors turned cautious following the disappointing release of German IFO business survey results. This, in turn, was seen as one of the key factors that provided a modest lift to the safe-haven XAU/USD.

Against the backdrop of a delay in vaccine supplies, Monday’s data further fueled worries about the potential economic fallout from the ever-increasing coronavirus disease and weighed on investors’ sentiment. The anti-risk flow was reinforced by an intraday pullback in the US Treasury bond yields, which provided an additional boost to the non-yielding yellow metal.

The supporting factors, to some extent, were offset by an uptick in the US dollar. This was seen as one of the key factors that capped gains for the dollar-denominated commodity, at least for the time being. This makes it prudent to wait for some strong follow-through buying before positioning for the resumption of last week’s bounce from the vicinity of the $1800 mark.

In the absence of any major market-moving economic releases from the US, developments surrounding the coronavirus saga will play a dominant role in influencing the broader market risk sentiment. Apart from this, the USD price dynamics will be looked upon to grab some short-term trading opportunities around the XAU/USD.

Meanwhile, the key focus will remain on the latest FOMC monetary policy update on Wednesday. This will be followed by the Advance US Q4 GDP report, which should assist investors to determine the next leg of a directional move for the commodity.

Technical levels to watch