- Gold witnessed a modest pullback on Tuesday amid the prevalent upbeat market mood.
- The US political uncertainty kept the USD bulls on the defensive and helped limit losses.
- Investors now prefer to wait on the sidelines ahead of Tuesday’s US presidential election.
Gold edged lower through the Asian session, albeit lacked any strong follow-through and remained well within the striking distance of multi-day tops set earlier this Tuesday.
The precious metal stalled its recent recovery move from one-month lows ahead of the $1900 mark and witnessed a modest pullback during the first half of the trading action on Tuesday. The prevalent upbeat market mood – as depicted by another day of strong gains in the US equity futures – was seen as a key factor weighing on traditional safe-haven assets, including gold.
The negative factor, to a larger extent, was offset by a weaker tone surrounding the US dollar. Growing wariness about the actual outcome of Tuesday’s US presidential election kept the USD bulls on the defensive. This, in turn, extended some support to dollar-denominated commodities and helped limit any meaningful losses for the XAU/USD, at least for the time being.
It is worth reporting that the incoming opinion polls have been indicating a strong lead for Democrat challenger Joe Biden over incumbent President Donald Trump. However, the gap is narrow in key battleground states, forcing investors to remain on the sidelines rather than betting on a particular result of the US election.
Apart from this, concerns about the economic fallout from fresh lockdown measures to curb the second wave of coronavirus infections further collaborated towards limiting the downside for the yellow metal. This makes it prudent to wait for some strong follow-through selling before traders again start positioning for the resumption of the recent downward trajectory.
There isn’t any major market-moving economic data due for release from the US on Tuesday. Hence, the key focus will be on the US elections. This, along with developments surrounding the coronavirus saga and the broader market risk sentiment, will play a key role in influencing the XAU/USD and assist traders to grab some short-term opportunities.
Technical levels to watch
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