XAU / USD Returns Modest Initial Gains and Pulls Back Below $ 1,880 Level

  • Gold gained traction for the second day in a row on Tuesday.
  • Falling US bond yields continued to support the rally.
  • Risk appetite sentiment limits any significant rally for the precious metal.

The gold has returned a significant portion of its initial earnings to the region of $ 1,884-85 and at the time of writing, falls back below the $ 1,880 level remaining virtually unchanged throughout the day.

Following the previous day’s pullback from the $ 1,890 region, the precious metal has captured some new purchases for the second day in a row, backed by a combination of factors. The euphoric market reaction to the positive news of the COVID-19 vaccine faded rather quickly amid questions about the efficacy and duration of the immunity provided.

In addition, concerns about the continued rise in new infections in the US and the imposition of stricter restrictions in several states the US have revived hopes of a substantial stimulus package to support the economy by the Fed. This, in turn, has kept the US dollar bulls on the defensive and it has been seen as a key factor that benefits gold prices, denominated in dollars.

The dollar has been further pressured by a weaker tone around US Treasury yields., which has provided an additional boost to the yellow metal. But nevertheless, the optimistic sentiment prevailing in the market, as shown by a bullish sentiment in the stock markets, has weighed on the safe haven XAU / USD and has limited any solid continuation to the upside.

Given that US banks will remain closed in commemoration of Veterans Day, investors may be reluctant to open aggressive positions. This makes it prudent to wait for a sustained move above the round $ 1,900 level before positioning for any big move in either direction amid the absence of relevant US economic releases.

Credits: Forex Street

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