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  • Gold witnessed some selling on Tuesday and eroded a major part of the overnight positive move.
  • The downside remains cushioned on the back of a cautious mood around the US equity futures.
  • The Fed Chair Jerome Powell’s speech will be looked upon for some meaningful trading impetus.

Gold traded with a mild negative bias through the early European session and was last seen hovering near the lower end of its daily range, around the $1907 region.

The precious metal failed to capitalize on the previous day’s goodish intraday move up of over $30 from two-day lows and witnessed some selling during the first half of the trading action on Tuesday. The latest optimism over the US President Donald Trump’s return to the White House following a three-day hospital stay due to coronavirus infection was seen as a key factor undermining safe-haven assets, including gold.

Adding to this, a modest US dollar rebound from daily lows exerted some additional pressure on the dollar-denominated commodity. The greenback found some support from reviving hopes that US lawmakers may be close to a compromise over a new coronavirus relief package after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by phone for about an hour Monday. The discussion is set to continue later Tuesday.

Despite the positive-developments, investors turned cautious on the back of the political uncertainty ahead of the US presidential election on November 3. This was evident from a softer tone surrounding the US equity futures and a pullback in the US Treasury bond yields, which helped limit any deeper losses for the non-yielding yellow metal.

Market participants might also refrain from placing any aggressive bets ahead of the Fed Chair Jerome Powell’s scheduled speech later during the North American session. Hence, it will be prudent to wait for some strong follow-through selling before positioning for any further depreciating move amid absent relevant market moving economic releases.

Technical levels to watch

Immediate support is pegged near the $1900 mark and is closely followed by the overnight swing lows, around the $1887 region. Failure to defend the mentioned support levels might turn the XAU/USD vulnerable to accelerate the fall further towards the $1862 horizontal zone with some intermediate support near the $1880 area. On the flip side, the $1918 region now becomes immediate resistance, above which the commodity is likely to test the $1928 strong support breakpoint. The momentum could further get extended towards a multi-week-old descending trend-line hurdle near the $1936 region.