Gold Price Analysis: XAU/USD extends daily rally to $1,710
|- Gold finds demand as a safe-haven amid risk aversion.
- Major European equity indexes suffer heavy losses on Tuesday.
- Broad USD strength keeps XAU/USD gains limited for the time being.
The troy ounce of the precious metal lost more than $50 last week as the risk rally made it difficult for gold to attract investors as a safe-haven. After staging a technical recovery and posting modest daily gains on Monday, the XAU/USD pair stretched higher on Tuesday and was last seen gaining 0.7% on the day at $1,710.30.
Global stocks slump on Tuesday
Renewed worries about the coronavirus with new infections increasing at its strongest pace since the outbreak on Monday is keeping investors on the back foot. Mirroring the risk-off environment, Germany's DAX 30 Index and the Euro Stoxx 50 Index are both down 1.85% on the day. Additionally, the S&P 500 futures are losing 0.85% to suggest that Wall Street is likely to open in the negative territory.
On the other hand, the greenback is also taking advantage of risk-off flows and gathering strength against its major peers. As of writing, the US Dollar Index is up 0.2% on the day at 96.90 and keeping the pair's gains limited for the time being.
During the American session, the IBD/TIPP Economic Optimism Index and JOLTS Job Openings will be featured in the US economic docket. Nevertheless, investors are likely to remain focused on risk perception. A sharp drop in major US equity indexes could help gold continue to find demand.
Technical levels to watch for
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