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  • A softer tone surrounding the USD assisted gold to regain some positive traction on Tuesday.
  • Worries about the ever-increasing COVID-19 cases further benefitted the safe-haven metal.
  • The lack of any strong follow-through warrants some caution before placing fresh bullish bets.

Gold edged higher during the Asian session on Tuesday and was last seen hovering near the top end of its daily trading range, just below the $1910 region.

Having shown some resilience below the $1900 level, the precious metal managed to regain some positive traction and moved away from seven-day lows set in the previous session. The uncertain US political environment kept the US dollar bulls on the defensive, which was seen as a key factor lending some support to dollar-denominated commodities – including gold.

Adding to this, investors remain concerned over the potential economic impact from renewed lockdown measures to curb the ever-rising number of COVID-19 cases. Renewed coronavirus jitters, along with the lack of progress in the next round of the US stimulus measures, dented investors’ appetite for riskier assets and provided an additional boost to the safe-haven metal.

Given the overnight bounce from the vicinity of 100-day SMA, the uptick could further be attributed to some technical buying, albeit lacked any strong bullish conviction. This makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD might have formed a strong base and positioning for any further near-term appreciating move.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders. The data might influence the USD price dynamics and provide some impetus. Apart from this, the broader market risk sentiment will also be looked upon to grab some meaningful trading opportunities around the XAU/USD.

Technical levels to watch