- Gold continued scaling higher for the third consecutive session and shot to one-month tops.
- Sustained USD selling benefitted the dollar-denominated commodity and remained supportive.
- The upbeat market mood might keep a lid on any further gains for the safe-haven yellow metal.
Gold maintained its strong bid tone through the mid-European session and shot to fresh one-month, around the $1884 region in the last hour.
The precious metal gained some strong follow-through traction for the third consecutive session and has now rallied over 3.5% from two-week lows, around the $1818 region set on Monday. The strong momentum was exclusively sponsored by the prevalent bearish sentiment surrounding the US dollar, which tends to underpin demand for the dollar-denominated commodity.
In fact, the USD Index slumped to fresh multi-year lows on Thursday amid growing prospects for another round of the US fiscal stimulus measures. Republicans and Democrats in the US Congress – though haven’t yet come to an agreement – sounded more positive on Wednesday and were reportedly closing in on approving a $908 billion COVID-19 relief package.
The greenback was further pressured by the fact that the Fed showed a willingness to do more if needed and said that it will continue to support the economy through massive monetary stimulus. The Fed also promised to keep interest rates near zero for years to come, which, in turn, provided an additional boost to the non-yielding yellow metal and remained supportive.
Meanwhile, the global risk sentiment remained well supported by the recent optimism over the rollout of vaccines for the highly contagious coronavirus disease and hopes for a last-minute Brexit deal. The risk-on flow tends to weigh on traditional safe-haven assets, which seemed to be the only factor that kept a lid on any further gains for the XAU/USD.
From a technical perspective, the intraday positive move beyond the previous monthly swing highs resistance near the $1875 region might have already set the stage for additional gains. Hence, any meaningful pullback might still be seen as a buying opportunity and is more likely to remain limited, at least for the time being.
Technical levels to watch
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