Gold rallies to 1-1/2 week tops, approaching $1600 mark

Gold maintained its strong bid tone through the early European session and was last seen trading near 1-1/2 week tops, just below the $1590 region.

The precious metal built on its recent bounce from the $1450 support area, or YTD lows, and continued gaining strong positive traction for the third consecutive session on Tuesday.

The Fed announced unprecedented measures to buy unlimited amounts of Treasury bonds and mortgage-backed securities to support the economy struggling from the coronavirus pandemic.

The extraordinary array of programs helped ease concerns over tightening liquidity and was aimed to keep borrowing costs at low levels, which eventually underpinned the non-yielding yellow metal.

Meanwhile, the latest move also halted the global rush to cash, which prompted some aggressive US dollar long-unwinding trade and provided an additional boost to the dollar-denominated commodity.

The strong intraday positive momentum seemed rather unaffected by a goodish recovery in the global risk sentiment, which tends to dampen demand for traditional safe-haven assets, including gold.

Tuesday's strong follow-through momentum could further be attributed to some technical buying, all against the backdrop of the overnight sustained back through the $1527-30 horizontal resistance.

A sustained move beyond the $1600 round-figure mark will reinforce the bullish set-up and set the stage for a further near-term appreciating move, possibly back towards the $1638-40 supply zone.

Technical levels to watch