Gold Price Analysis: XAU/USD clings to gains near $1840 area, over one-week tops
|- Gold continued scaling higher for the third consecutive session amid sustained USD selling.
- Hopes for more US fiscal stimulus weighed on the greenback and benefitted the commodity.
- COVID-19 vaccine optimism held bulls from placing aggressive bets and might cap the upside.
Gold maintained its bid tone through the mid-European session and was last seen trading near the top end of its daily range, or over one-week highs around the $1840 region.
The US dollar prolonged its recent bearish trajectory and plunged to its lowest in more than two years on Thursday amid hopes for additional US fiscal stimulus. The US lawmakers, so far, have failed to reach an agreement but there were early signs that a $908 billion bipartisan proposal could be gaining traction.
This, in turn, was seen as a key factor that assisted the dollar-denominated commodity to build on this week's goodish rebound from the $1764 region, or near five-month lows. Apart from this, a softer tone surrounding the US Treasury bond yields further drove flows towards the non-yielding yellow metal and remained supportive.
The uptick marked the third consecutive day of a positive move, though the optimism about developments towards the roll-out of COVID-19 vaccines kept a lid on any runaway rally for the XAU/USD. Market participants now look forward to the releases of Initial Jobless Claims and ISM Services PMI from the US for a fresh impetus.
From a technical perspective, the commodity remains below a previous strong support breakpoint, now turned resistance near the $1850-48 region. This makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD has bottomed out in the near-term and positioning for any further near-term appreciating move.
Technical levels to watch
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