- Gold is gaining some positive traction on Thursday, although it lacks a strong following.
- A softer risk appetite, falling US bond yields and a weaker USD offer some support for the precious metal.
- The lack of a strong continuation warrants some caution before opening new bullish positions.
The gold trades with a slight positive bias during the European session on Thursday, moving slightly higher within a narrow range around the region of $ 1,870.
A combination of supporting factors has helped the precious metal gain some positive traction on Thursday and recover a significant part of the modest losses of the previous day. Despite promising development in COVID-19 vaccine trials, investors continue to concerned about the possible economic consequences of the imposition of stricter restrictions to stop the outbreak. The nervousness is taking its toll on global risk sentiment and is benefiting safe haven assets such as gold.
The global flight to safe haven has been seen bolstered by a sharp drop in US Treasury yields., which has further fueled some additional monetary flows towards the yellow metal. Further, Revival of hopes for additional US fiscal stimulus measures to support the economy has kept US dollar bulls on the defensive, which supports the prices of gold, denominated in dollars.
Having said that, the rally has lacked a strong follow-on buy and the XAU / USD has remained trapped within a three-day trading range. Given this week’s sharp pullback from the $ 1,965 region, price action within the range could be classified as a consolidation phase. Gold’s inability to post a significant recovery further indicates that the sell bias is far from over.
Market participants are now awaiting Thursday’s US economic calendar, featuring the latest releases of consumer inflation figures and initial weekly jobless claims. This, along with the broader market risk sentiment, will influence the price dynamics of the XAU / USD and help investors seize some significant opportunities.
Credits: Forex Street
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