- Gold built on the overnight positive move and gained some follow-through traction on Tuesday.
- A softer risk tone was seen as one of the key factors that benefitted the safe-haven commodity.
- A modest uptick in the US bond yields extended some support to the USD and might cap gains.
Gold traded with a mild positive bias through the early North American session and was last seen hovering near two-week tops, around the $1870 region.
The precious metal built on the previous day’s goodish intraday positive move from the $1822 region and gained some follow-through traction on Tuesday. The uptick marked the fifth day of a positive move in the previous six and assisted the commodity to prolong its recent strong rebound from four-month lows touched on November 30.
The optimism over the rollout of a vaccine for the highly contagious coronavirus disease and prospects for additional US fiscal stimulus was overshadowed by worries about the continuous surge in new cases. This, in turn, weighed on investors’ sentiment and was evident from a modest pullback in the equity markets. The anti-risk flow turned out to be a key factor that provided a modest lift to traditional safe-haven assets, including gold.
Meanwhile, a modest uptick in the US Treasury bond yields extended some support to the US dollar, which, in turn, might keep a lid on any further gains for the non-yielding yellow metal. That said, the near-term bias remains tilted in favour of bullish traders and supports prospects for a move towards the $1889-90 horizontal resistance. The positive momentum could eventually assist the XAU/USD to reclaim the $1900 mark.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment will continue to play a key role in influencing the commodity. This, along with the USD price dynamics and the US fiscal stimulus headlines, might further contribute to produce some meaningful trading opportunities around the XAU/USD.
Technical levels to watch
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