- A combination of factors assisted the precious metal to gain traction on Thursday.
- The US fiscal impasse undermined the USD and remained supportive of the uptick.
- The positive move lacked any strong follow-through, warranting caution for bulls.
Gold edged lower during the early North American session and retreated to the lower end of its daily trading range, albeit lacked any strong follow-through selling.
Following the previous day’s rather volatile price swings, the precious metal managed to regain some positive traction on Thursday and was being supported by a combination of factors. The US dollar remained depressed amid uncertainty over the next round of the US fiscal stimulus measures, which, in turn, was seen as one of the key factors that benefitted the dollar-denominated commodity.
This, coupled with a weaker tone surrounding the US Treasury bond yields further undermined the greenback and provided an additional boost to the non-yielding yellow metal. However, expectations that the US lawmakers will eventually reach a consensus on the stimulus measures held investors from placing any aggressive bullish bets and kept a lid on any strong gains for the precious metal.
On the economic data front, the US Initial Weekly Jobless Claims came in much lower than consensus estimates and exerted some downward pressure over the past hour or so. The commodity dropped to the $1920 region after data published from the US revealed that 963K Americans claimed unemployment-related benefits during the week ending August 8, lower than 1.12 million anticipated.
The metal has now moved back to its intraday trading range and was last seen hovering around the $1930 region. It will now be interesting to see if bulls are able to take back control or the commodity continues with its subdued/range-bound trading action. The focus remains on the US political deadlock over the stimulus package to support economic recovery from the coronavirus pandemic.
Technical levels to watch
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