Gold Price Analysis: XAU/USD recovers further from multi-week lows, climbs to $1845 region

Gold edged higher during the early European session and climbed to two-day tops, around the $1845 region in the last hour.

The precious metal gained positive traction for the second consecutive session on Tuesday and built on the overnight goodish rebound from the vicinity of the $1800 mark, or seven-week lows. The uptick was exclusively sponsored by a modest US dollar pullback from nearly one-month tops, which tends to benefit the dollar-denominated commodity.

That said, the prevalent upbeat market mood held bullish traders from placing any aggressive bets and might keep a lid on any strong rally for the safe-haven XAU/USD. The global risk sentiment remained well supported by the optimism over the rollout of COVID-19 vaccines and hopes for more aggressive fiscal spending under Joe Biden's presidency.

Meanwhile, expectations for a larger government borrowing triggered a fresh leg up in the US Treasury bond yields. This might turn out to be another factor that could cap the upside for the non-yielding yellow metal. Investors might also prefer to wait on the sidelines ahead of the President-elect Joe Biden's inaugural ceremony on Wednesday.

This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move. In the absence of any major market-moving economic releases, traders will look forward to US Treasury Secretary nominee Janet Yellen’s confirmation hearing for some impetus. 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