- Gold gains some positive traction on Friday and moves away from month-long lows.
- A dovish USD price action and weaker risk appetite support the move higher.
- The technical setup supports the prospects for a further decline and warrants caution for the bulls.
Prices of the Gold is moving with a slight positive bias during the European session on Friday, although it lacks continuation and oscillates within a range. just above the $ 1,870 level.
A combination of supporting factors has helped the precious metal to gain some positive traction on the last trading day of the week, moving away from the one-month lows set the day before. US dollar bulls have refrained from opening new positions amid the uncertainty about the election result presidential elections. This, in turn, has been seen as one of the key factors that provided some support to gold prices, denominated in dollars.
Apart from this, concerns about the economic consequences of the new restrictions to curb the second wave of coronavirus they have weighed on investor sentiment and led to some safe-haven money flows towards XAU / USD. Risk aversion has been evident thanks to a new downward movement in stock index futures boosted by falling US Treasury yields, which has further benefited the yellow metal and continued to support the rally.
Despite the supporting factors, the XAU / USD lacks strong bullish conviction and remains within the broadest trading range of the previous day. Even from a technical perspective, the previous day’s slide has added credibility to this week’s bearish break below the 100-day SMA for the first time since March. This warrants some caution for aggressive bulls before positioning for any significant short-term bullish movements.
Market participants are now looking forward to second-tier economic releases in the US, featuring the release of the core PCE price index, Chicago PMI and revised University Michigan consumer sentiment. The data, along with broader market risk sentiment, will influence USD price dynamics and could lead to some significant trading opportunities on the last day of the week.
Credits: Forex Street
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