XAU / USD retraces from multi-week highs, still comfortable above the $ 1,950 level

• A softer tone around the USD helps gold gain some traction on Monday.
• Speculation of further easing by the Fed benefits the yellow metal even more.
• The prevailing sentiment of risk appetite appears to be the only factor limiting the big gains.

The gold has returned a portion of its initial earnings to the highest level since mid-September, around $ 1,965, though is managing to stay positive on the day above the $ 1,950 level during the European session on Monday.

The US dollar has been kept under pressure following the victory of Democratic candidate Joe Biden in the US presidential elections A weaker USD is considered one of the key factors that benefits dollar-denominated commodity prices, like gold.

Meanwhile, the possibility of a divided Congress has fueled speculation that the Fed will have to further relax its monetary policy to support the economy amid the short-term risk of a growing COVID-19 infection. This, in turn, has provided an additional boost to the yellow metal.

But nevertheless, optimistic market sentiment, as shown by a strong rally in stock markets, has weighed on the demand for traditional safe haven assets. The prevailing environment of risk appetite has prevented gold bulls from opening new positions and has limited any additional earnings for the precious metal.

Having said that, the short-term bias still seems firmly tilted in favor of the bulls and supports the prospects for additional earnings. Therefore, any significant decline should be seen as a buying opportunity, which should help limit the decline in the XAU / USD, at least for now.

There is no major economic data release in the United States on Monday. Therefore, USD price dynamics, along with broader market risk sentiment, will play a key role in influencing intraday movement and help investors seize some short-term opportunities.