- Gold witnessed some selling for the third consecutive session amid stronger USD.
- The cautious mood underpinned the safe-haven commodity and helped limit losses.
- The US GDP came in to show a 4% growth in Q4 but did little to provide any impetus.
Gold remained on the defensive through the early North American session, albeit managed to hold its neck above daily lows. The commodity was last seen trading just below the $1840 level, down around 0.50% for the day.
The precious metal added to this week’s losses and witnessed some follow-through selling for the third consecutive session on Thursday. The decline was exclusively sponsored by resurgent US dollar demand, which tends to undermine demand for dollar-denominated commodities, including gold.
A delay in COVID-19 vaccine supplies further fueled worries about the potential economic damage caused by the pandemic and benefitted the greenback’s status as the global reserve currency. The USD was further supported by doubts about the timing and size of a new US economic stimulus package.
On the economic data front, the Advance US GDP report showed that the economy expanded by 4.0% annualized pace during the fourth quarter of 2020. This was bang in line with market expectations, though marked a considerable loss of growth momentum amid the imposition of strict restrictions.
That said, a cautious mood around the equity markets extended some support to the safe-haven XAU/USD and helped limit any deeper losses, at least for the time being. This makes it prudent to wait for some strong follow-through selling before positioning for any further depreciating move.
Looking at the technical picture, the XAU/USD on Wednesday confirmed a near-term bearish breakdown through a symmetrical triangle. Hence, the near-term bias remains tilted in favour of bearish traders and supports prospects for a retest of monthly swing lows, around the $1800 round-figure.
Technical levels to watch