Gold Price Analysis: XAU/USD reverses an intraday dip back closer to weekly lows

Gold edged lower during the mid-European session and dropped to the lower end of its weekly range, around the $1824 region, albeit lacked follow-through.

The optimism over COVID-19 vaccine rollouts now seemed to have revived hopes for a swift global economic recovery. This, in turn, undermined demand for traditional safe-haven assets and kept the precious metal on the defensive for the third consecutive session on Friday.

This, coupled with a sudden pickup in the US dollar demand, exerted some additional pressure on the dollar-denominated commodity. However, deteriorating global risk sentiment extended some support to the XAU/USD and helped limit deeper losses, at least for the time being.

The impasse over the next round of the US fiscal stimulus measures and increasing chances of a no-deal Brexit fears dented investors' confidence. The uncertainties prompted investors to take some profits off the table and led to a sharp corrective fall in the equity markets.

This makes it prudent to wait for some follow-through selling before confirming that the recent bounce from multi-month lows has run out of the steam. That said, sustained weakness below the $1820 level will set the stage for a further depreciating move for the XAU/USD.

Market participants now look forward to the US economic docket, featuring the releases of Producer Price Index and revised Michigan Consumer Sentiment Index. Apart from this, the US stimulus headlines might influence the USD price dynamics and provided some impetus.

Traders will further take cues from the broader market risk sentiment in order to grab some short-term opportunities on the last day of the week.

Technical levels to watch