Gold Price Analysis: XAU/USD keeps the bounce off $1,700 amid risk-on sentiment

While keeping the latest recovery moves from $1,704.28, Gold prices rise to $1,728 amid the initial Asian session on Tuesday. Even so, the bullion seesaws in the immediate range between $1,723.45 and $1,728.48.

The precious metal fell on Monday amid the market’s broad risk aversion wave backed by the fears of the coronavirus (COVID-19) resurgence. The cautious sentiment gained momentum after weekend headlines suggested a jump in the virus cases from the US, Tokyo and Japan.

However, the US Federal Reserve’s (Fed) announcement to increase the span of its corporate bond buying triggered the risk-on sentiment. Also recently supporting the optimism could be the hopes of the US-China talks in Hawaii and expectations of a V-shaped recovery.

It should also be noted that the UK’s human testing of the second vaccine to combat the pandemic adds to the positive mood. Though, the US Food and Drug Administration’s (FDA) warning over the use of much-championed drug Remdesivir caps the optimism.

Against this backdrop, S&P 500 Futures extend Wall Street’s upbeat performance with 0.10% gains to 3,069.

Given the lack of major data/events in Asia, except for RBA minutes and the BOJ, gold traders are likely to keep eyes on the risk factors for fresh impetus. In doing so, the updates concerning the pandemic and US-China relations, as well as hopes of economic recovery, could gain major attention.

Technical analysis

Although 21-day SMA around $1,723 restricts the yellow metal’s immediate downside, buyers are less likely to enter any fresh positions unless crossing the monthly top above $1,745.