Gold Price Analysis: XAU/USD remains depressed near $1860 area, downside seems limited
|- The risk-on mood prompted some selling around the safe-haven gold on Wednesday.
- Sustained USD selling extended some support to the dollar-denominated commodity.
- A goodish pickup in the US bond yields might keep a lid on any meaningful move up.
Gold edged lower through the Asian session and dropped to two-day lows, around the $1855 region, albeit lacked any strong follow-through.
The precious metal witnessed some selling during the first half of the trading action on Wednesday and for now, seems to have stalled its recent strong recovery move from multi-month lows. The prevalent upbeat market mood was seen as one of the key factors exerting some pressure on the safe-haven XAU/USD, though the prevalent US dollar selling bias helped limit the downside.
The global risk sentiment remained well supported by the recent positive news on COVID-19 vaccine. Johnson & Johnson reported that it could obtain late-stage trial results for a single-dose vaccine in January, earlier than expected. Separately, Pfizer cleared another hurdle after the US Food and Drug Administration (FDA) released documents flagging no new safety or efficacy concerns.
Meanwhile, prospects for additional US fiscal stimulus measures to help offset the economic impact of the pandemic continued weighing on the greenback and extended some support to the dollar-denominated commodity. Even a goodish pickup in the US Treasury bond yields failed to impress the USD bulls, albeit might keep a lid on any runaway rally for the non-yielding yellow metal.
There isn't any major market-moving economic data due for release from the US on Wednesday. Hence, the US fiscal stimulus headlines will play a key role in influencing the USD price dynamics. This, along with the broader market risk sentiment, might further contribute to produce some short-term trading opportunities around the XAU/USD.
Technical levels to watch
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