Gold Price Analysis: XAU/USD hangs near weekly lows, around $1835 amid stronger USD
|- A broad-based USD strength prompted some fresh selling around gold on Thursday.
- The prevalent risk-off mood could help limit the downside for the safe-haven metal.
- Investors now look forward to the US Q4 GDP report for some meaningful impetus.
Gold traded with a negative bias through the early European session and was last seen hovering near the lower end of its daily range, around the $1835 region.
The precious metal struggled to capitalize on the previous day's post-FOMC bounce from one-and-half-week lows, around the $1831 region, instead met with fresh supply on Thursday amid stronger US dollar. The Fed expressed concerns about the pace of the US economic recovery downplayed speculations of tapering bond purchases sooner than expected, which extended some support to the XAU/USD.
Meanwhile, investors remain worried about the potential economic fallout from the reimposition of strict restrictions and a delay in COVID-19 vaccine supplies. In fact, the UK announced new measures to clamp down on travel to and from Britain and indicated that the lockdown would last until March 8. Separately, China also sought to limit Lunar New Year trips to stem a surge in COVID-19 cases.
This continued underpinning the greenback's status as the global reserve currency and was seen as one of the key factors that exerted some downward pressure on the dollar-denominated commodity. However, the prevalent risk-off environment – as depicted by some follow-through weakness in the equity markets – might help limit any deeper losses for the safe-haven commodity, at least for the time being.
That said, the overnight bearish break below symmetrical triangle support might have already shifted the near-term bias back in favour of bearish traders. Hence, some follow-through weakness back towards testing monthly swing lows, around the $1800 round-figure mark, remains a distinct possibility. Any attempted recovery move might now be seen as a selling opportunity and remain capped.
Market participants now look forward to the release of the Advance US Q4 GDP report, which should influence the USD price dynamics later during the early North American session. Apart from this, the broader market risk sentiment and developments surrounding the coronavirus saga will be looked upon to grab some meaningful trading opportunities around the XAU/USD.
Technical levels to watch
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