- Gold remained under some heavy selling pressure for the second straight day on Tuesday.
- COVID-19 vaccine optimism was seen as a key factor weighed on the safe-haven commodity.
- Dovish Fed expectations undermined the USD, albeit failed to lend any support to the metal.
Gold continued losing ground through the mid-European session and dropped to fresh four-month lows, closer to $1800 mark in the last hour.
The precious metal prolonged its recent rejection slide from the $1900 mark and witnessed some heavy selling for the second consecutive session on Tuesday. The downfall marked the fifth day of a negative move in the previous six and was exclusively sponsored by the prevalent upbeat market mood, which tends to undermine demand for traditional safe-haven assets, including gold.
The global risk sentiment remained well supported by the latest optimism over a potential vaccine for the highly contagious coronavirus diseases. Adding to this, the formal go-ahead for the US President-elect Joe Biden to begin his White House transition and reports that former Fed Chair Janet Yellen could become the next US Treasury Secretary further boosted investors’ confidence.
Meanwhile, speculations that the Fed might ease further in December amid concerns about the economic fallout from the continuous surge in new coronavirus cases continued weighing on the US dollar. A broad-based USD weakness, however, did little to lend any support to the dollar-denominated commodity or hinder the intraday slide to the lowest level since July 20.
That said, slightly oversold conditions on intraday charts might hold investors from placing fresh bearish bets. Hence, any subsequent slide is more likely to remain limited and find decent support near the very important 200-day SMA, currently around the $1795 region. However, any meaningful recovery seems elusive and any attempted recovery is likely to remain short-lived.
Market participants now look forward to the US economic docket, featuring the releases of the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index. The data might influence the USD price dynamics and produce some short-term trading opportunities around the XAU/USD during the early North American session.
Technical levels to watch
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