Gold Price Analysis: XAU/USD moves back above $1840 level, two-day tops

Gold added to its intraday gains and climbed to fresh daily tops, around the $1843 region during the early European session.

The precious metal caught some fresh bids on Tuesday and built on the previous day's late bounce from near two-week lows, around the $1818 region. The continuous surge in new coronavirus cases overshadowed the recent optimism over the rollout of vaccines for the highly contagious disease, which, in turn, benefitted the commodity's safe-haven status.

Apart from this, hopes for additional US fiscal stimulus measures extended some additional support to the non-yielding yellow metal and remained supportive. Meanwhile, a subdued US dollar price action did little to influence the dollar-denominated commodity or hinder the intraday positive move, with bulls looking to build on the strength beyond 200-hour SMA.

That said, the upside is likely to remain capped near the $1848-50 region as investors might refrain from placing aggressive bets ahead of a two-day FOMC monetary policy meeting, starting this Tuesday. Hence, any subsequent move up runs the risk of fizzling out rather quickly and warrants some caution before positioning for any further appreciating move.

Market participants now look forward to the US economic docket – featuring the second-tier releases of the Empire State Manufacturing Index and Industrial Production data. This, along with the US stimulus headlines, might influence the USD price dynamics. Traders might further take cues from developments surrounding the coronavirus saga and the broader market risk sentiment.

Technical levels to watch