Gold steadily climbs back above $1580 level amid risk-off mood

Gold edged higher through the early European session on Thursday and is currently placed near the top end of its daily trading range, just above the $1580 region.

The precious metal added to the overnight positive move and gained some follow-through traction for the second consecutive session on Thursday. Persistent worries over the outbreak of the coronavirus in China led to a fresh wave of the global risk-aversion trade on Thursday and benefitted traditional safe-haven assets – including gold.

Gold supported by a combination of factors

The risk-off mood was further reinforced by the ongoing slump in the US Treasury bond yields. This comes on the back of a dovish assessment of Wednesday's FOMC policy update and further played its part in driving the non-yielding yellow metal higher. As was widely expected, the US central bank left its benchmark rate unchanged in the range of 1.5% to 1.75%.

However, the Fed Chair Jerome Powell, in the post-meeting press conference, admitted that he was not satisfied with inflation running below the 2% target. This fueled market expectations that the Fed would lower rates at least once this year and kept a lid on the recent US dollar positive move, which further extended some support to the dollar-denominated commodity.

It will now be interesting to see if the commodity is able to capitalize on the positive move or meets with some fresh supply at higher levels. Market participants now look forward to Thursday's release of the Advance US Q4 GDP growth figures. Ahead of the key US macro data, the BoE-led volatility in the market might further contribute towards producing some meaningful trading opportunities.

Technical levels to watch