- Gold added to the overnight losses and remained depressed for the second straight session.
- COVID-19 optimism boosted investors’ confidence and weighed on the safe-haven commodity.
- Weaker USD, dovish Fed expectations extended some support and helped limit losses, for now.
Gold maintained its offered tone through the early European session, albeit has managed to pare a part of the early losses to four-month lows. The precious metal was last seen trading near the $1830 region, down around 0.50% for the day.
The commodity added to the overnight losses and witnessed some follow-through selling for the second consecutive session on Tuesday. The downfall also marked the fifth day of a negative move in the previous six and was sponsored by the prevalent risk-on environment, which tends to undermine demand for the safe-haven gold.
The global risk sentiment remained well supported by the latest optimism over a potential early rollout of vaccines for the highly contagious coronavirus disease. The already upbeat market mood got an additional boost on news that the US President-elect Joe Biden was given the go-ahead to begin his White House transition.
However, the emergence of some fresh selling around the US dollar extended some support to the dollar-denominated commodity. The greenback was pressured by growing market speculations for a further monetary easing by the Fed, which, in turn, helped the non-yielding yellow metal to find some support near the $1820 congestion zone.
That said, any meaningful recovery still seems elusive and the near-term bias for the XAU/USD remains tilted firmly in favour of bearish traders. Hence, some follow-through weakness towards testing the very important 200-day SMA support, currently pegged near the $1795 region, looks a distinct possibility.
Market participants now look forward to the US economic docket, featuring the releases of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index. The data might influence the USD price dynamics, which, along with the broader market risk sentiment, should produce some meaningful trading opportunities.
Technical levels to watch
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