- A subdued USD demand assisted gold to gain some positive traction on Thursday.
- The risk-on mood, rallying US bond yields capped the upside for the commodity.
Gold struggled to preserve its intraday gains and moved into the neutral territory, around the $1920 region during the early European session.
The precious metal managed to regain some positive traction on Thursday and moved away from weekly lows, around the $1900 mark set in the previous session. The US dollar languished around its lowest level in nearly three years, which, in turn, was seen as one of the key factors lending some support to the dollar-denominated commodity.
Meanwhile, a Democrat sweep in Georgia’s Senate runoff election raised expectations for more US stimulus measures. Expectations of larger government borrowing pushed the benchmark 10-year US Treasury yield further beyond 1.0% mark, to the highest level since March and kept a lid on any strong gains for the non-yielding yellow metal.
Apart from this, hopes for a strong global economic recovery in 2021 remained supportive of the underlying bullish sentiment in the financial markets. The risk-on flow tends to undermine demand for traditional safe-haven assets and might further collaborate towards capping the upside for the XAU/USD, at least for the time being.
This makes it prudent to wait for some follow-through buying before positioning for the resumption of the recent strong positive move witnessed over the past one-and-half-months or so. Market participants now look forward to the US economic releases – usual Initial Weekly Jobless Claims and ISM Services PMI. This, along with the broader market risk sentiment might produce some trading opportunities around the XAU/USD.
Technical levels to watch
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