Gold Price Analysis: XAU/USD remains depressed near $1975 level, lacks follow-through

Gold refreshed daily lows, around the $1870 region during the mid-European session, albeit lacked any follow-through selling. The commodity was last seen trading in the neutral territory, just above the $1975 level and remained well within the previous day's broader trading range.

The precious metal failed to capitalize on its early uptick, instead met with some fresh supply near the $1884-85 region and was being pressured by a combination of factors. The global risk sentiment remained well supported by the optimism over an effective vaccine for the highly contagious coronavirus disease. This was evident from the prevalent bullish tone around the equity markets, which undermined traditional safe-haven assets and capped the upside for the XAU/USD.

Apart from this, a modest pickup in the US dollar further exerted some downward pressure on the dollar-denominated commodity. That said, investors seemed reluctant to place any aggressive bearish bets amid growing worries about the continuous surge in new COVID-19 cases in the United States. This, along with reviving hopes for additional US fiscal stimulus, might hold the USD bulls from placing aggressive bets and help limit the downside for the non-yielding yellow metal.

Meanwhile, a partial holiday in the US markets – in observance of Veterans Day – could further restrict any big movements in either direction. Hence, it will be prudent to wait for some strong follow-through selling before traders start positioning for an extension of this week's sharp pullback from near two-month tops, around the $1965 region touched on Monday.

Technical levels to watch