- Renewed USD selling bias assist gold to regain positive traction on Tuesday.
- The upbeat market mood capped any further gains for the safe-haven metal.
Gold traded with a mild positive bias through the early European session, albeit lacked any strong follow-through buying. The commodity was last seen hovering around the $1880-79 region, up around 0.10% for the day.
Following the previous day’s rejection slide from the $1900 mark, the precious metal regained positive traction on Tuesday and was being supported by progress on additional US stimulus measures. The House of Representatives voted in favour of increasing the amount of COVID-19 relief payments to qualified Americans from $600 to $2,000 on Monday. This, in turn, weighed on the greenback and was seen as a key factor that benefitted the dollar-denominated commodity.
The US Senate will not vote on whether to increase the amount of the stimulus checks. This comes on the back of the latest optimism over a last-minute Brexit trade deal and further boosted investors’ confidence. The increased appetite for riskier assets was evident from the prevalent bullish sentiment around the global equity markets. The risk-on flow undermined demand for traditional safe-haven assets and kept a lid on any further gains for the XAU/USD, at least for now.
Meanwhile, the downside remains cushioned amid growing worries about the discovery of a new faster-spreading variant of the coronavirus. That said, thin trading volumes held investors from placing aggressive bets and might further contribute to cap the upside for the yellow metal. This makes it prudent to wait for some follow-through buying before traders again start positioning for any near-term appreciating move amid absent relevant fundamental catalyst.
From a technical perspective, the XAU/USD, so far, has managed to defend a two-week-old ascending trend-line. The mentioned support is currently pegged near the $1872 region. A convincing break below might prompt some technical selling and drag the commodity to the $1855 support zone. This is closely followed by static support near the $1850-48 region, which should act as a strong base for the metal and a key pivotal point for the next leg of a directional move.
Technical levels to watch