Gold rebounds swiftly from multi-week lows, rallies back to $1935 area

• Gold witnessed some aggressive intraday short-covering move from three-week lows.
• The USD trimmed a part of early gains and extended some support to the commodity.
• The risk-on mood might hold investors from placing aggressive bets and cap the upside.

Gold surged around $60 during the early European session and spiked to fresh daily tops, near the $1935-37 region in the last hour.

The precious metal witnessed a dramatic intraday turnaround on Wednesday following an early slide to the $1862-63 region, or three-week lows. The commodity, for now, seems to have snapped three consecutive days of the losing streak and stall the recent sharp corrective slide from record highs – set on August 8.

The US dollar trimmed a part of its daily gains and was seen as one of the key factors that prompted some aggressive short-covering move around the dollar-denominated commodity. Despite renewed hopes of a US economic recovery, the impasse over the next round of the US fiscal stimulus measures kept a lid on the early USD strength.

Meanwhile, the global risk sentiment remained well supported by the latest optimism over a potential vaccine for the highly contagious coronavirus disease. This, in turn, might hold investors from placing aggressive bullish bets and cap any further positive move for the safe-haven yellow metal, at least for the time being.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures for July. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.

Technical levels to watch