- A softer tone surrounding the USD assisted gold to reverse an intraday dip.
- The upbeat market mood, a pickup in the US bond yields capped the upside.
Gold reversed an intraday dip to three-day lows, albeit lacked any strong follow-through and was seen oscillating in a range, above the $1900 mark through the early European session.
Nervousness ahead of a self-imposed Tuesday deadline to pass the US fiscal stimulus measures kept the US dollar bulls on the defensive, which extended some support to the dollar-denominated commodity. Investors remain unconvinced that the legislation on a wide-ranging coronavirus relief package will be passed. This, along with concerns about the risk of a disputed US election outcome, further benefitted the safe-haven precious metal.
However, a solid bounce in the US equity markets held investors from placing any aggressive bullish bets. The risk-on mood was reinforced by a strong pickup in the US Treasury bond yields, which further collaborated towards capping any meaningful upside for the non-yielding yellow metal. This, in turn, warrants some caution for bullish traders and before positioning for a further intraday appreciating move for the XAU/USD, at least for now.
Even from a technical perspective, the commodity has been oscillating in a range over the past one week or so. This further makes it prudent to wait for a sustained breakthrough the mentioned trading range in order to determine the next leg of a directional move for the commodity.
Market participants now look forward to the US economic docket, featuring the release of Building Permits and Housing Starts. This, along with the broader market risk sentiment, developments surrounding the US fiscal stimulus and coronavirus saga, will influence the XAU/USD and produce some meaningful trading opportunities.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.