- The prevalent risk-off mood assisted gold to reverse an early dip to the $1796 region.
- A modest pickup in the USD demand might cap any further gains for the commodity.
Gold reversed an early European session dip to the $1796 region and refreshed daily tops in the last hour.
The precious metal edged lower during the first half of trading action on Friday and extended the previous day's modest pullback from the highest level since September 2011. The downtick was sponsored by some US dollar strength, which tends to undermine the dollar-denominated commodity.
However, the prevalent risk-off mood extended some support to the precious metal's safe-haven status and helped limit any deeper losses. The global risk sentiment took a turn for the worse after the US reported a record number of new coronavirus cases, over 60,000 on Thursday.
Investors were also worried that the US decision to sanction Chinese officials over human rights violations may lead to further escalation of Sino-US tensions. The anti-risk flow was evident from a fresh leg down across the global equity markets and benefitted traditional safe-haven assets.
Meanwhile, the emergence of some dip-buying beyond the $1800 mark suggests that the near-term bullish trajectory might still be far from being over. However, oscillators on daily/weekly charts are on the verge of moving into overbought territory and warrant some caution for bullish traders.
In the absence of any major market-moving economic releases, developments surrounding the coronavirus saga might continue to play a key role in influencing the commodity. This coupled with the USD price dynamics will also be looked upon for some meaningful trading opportunities on Friday.
Technical levels to watch
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