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  • Gold witnessed a dramatic intraday turnaround from six-week tops amid resurgent USD demand.
  • Fresh COVID-19 jitters offset news of additional US stimulus measures and boosted the greenback.
  • A turnaround in the global risk sentiment benefitted the safe-haven metal and helped limit losses.

Gold quickly reversed a mid-European session dip to three-day lows and is currently placed in the neutral territory, just below the $1885 level.

The precious metal witnessed an intraday turnaround and tumbled over $50 from daily swing highs near the $1906-07 region, or six-week tops touched earlier this Monday. The sharp fall was exclusively sponsored by a strong pickup in the US dollar demand, which tends to undermine demand for the dollar-denominated commodity.

The news that the US Congress reached a deal on a long-awaited $900 billion US COVID-19 relief package was overshadowed by worries about the rapidly spreading new strain of COVID-19 in the UK. This, in turn, provided a strong boost to the greenback status as the global reserve currency and exerted pressure on the XAU/USD.

Renewed coronavirus jitters, along with a deadlock in the post-Brexit trade negotiations, took its toll on the global risk sentiment. This was evident from a steep fall in the equity markets, which extended some support to the safe-haven precious metal and helped limit any further losses, at least for the time being.

The XAU/USD attracted some dip-buying near the $1855 region and was last seen hovering around the $1883-84 region, nearly unchanged for the day. In the absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics might continue to influence the commodity.

Technical levels to watch