- Renewed USD selling bias assisted gold to gain traction for the second consecutive day.
- The upbeat market mood, rallying US bond yields capped any further gains for the metal.
- Investors now eye Yellen’s confirmation hearing for some short-term trading opportunities.
Gold maintained its bid tone through the mid-European session, albeit seemed struggling to capitalize on the intraday positive move. The commodity was last seen trading around the $1840 region, well within the striking distance of session lows.
The precious metal built on the previous day's goodish recovery move from the vicinity of the $1800 mark and gained traction for the second consecutive session on Tuesday. The uptick was exclusively sponsored by the emergence of some selling around the US dollar, which tends to underpin demand for the dollar-denominated commodity.
The USD's pullback from near one-month tops could be solely attributed to some profit-taking ahead US Treasury Secretary nominee Janet Yellen's confirmation hearing later this Tuesday. Reports indicated that Yellen will urge lawmakers to act big to a protracted downturn and also outline the need for the proposed $1.9 trillion COVID-19 relief package.
Meanwhile, the market has been pricing in the prospects for more aggressive US fiscal spending in 2021 under Joe Biden's presidency. Expectations of a larger government borrowing were evident from the recent strong rally in the US Treasury bond yields. This, in turn, was seen as a key factor keeping a lid on strong gains for the non-yielding yellow metal.
Apart from hopes for additional US stimulus measures, the optimism over the rollout of vaccines for the highly contagious coronavirus disease continued boosting investors' confidence. This was evident from the underlying bullish sentiment in the equity markets, which further weighed on the safe-haven XAU/USD and capped the upside, at least for now.
In the absence of any major market-moving economic releases from the US, the precious metal remains at the mercy of the USD price dynamics and the broader market risk sentiment. This, along with the US bond yields and developments surrounding the coronavirus saga, might assist traders to grab some short-term opportunities on Tuesday.
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 Weekly Forecast: Sellers gain confidence alongside the Fed Premium
The EUR/USD pair fell towards a fresh two-month low of 1.0900, finishing the second consecutive week in negative though little changed at around 1.0940.
Read full analysis
GBP/USD Weekly Forecast: Pound Sterling stays vulnerable ahead of UK inflation data Premium
The Pound Sterling (GBP) booked the second straight weekly loss against the US Dollar (USD), sending the GBP/USD pair to the lowest level in a month below 1.3050.
Gold Weekly Forecast: XAU/USD holds above key support area after bearish action to start week Premium
Gold (XAU/USD) declined sharply in the first half of the week but regained its traction after coming within a touching distance of $2,600.
Bitcoin Weekly Forecast: Will BTC decline further?
Bitcoin’s (BTC) price fell over 6% at some point this week until Thursday, extending losses for a second consecutive week, as it faced rejection from a key resistance barrier.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.