Gold rises to new two-week highs near $ 1,920 level

• The prevailing selling bias in the USD helps gold regain positive traction on Thursday.
• Optimistic market sentiment could limit the rise before the FOMC monetary policy update.

The gold has moved higher during the European session on Thursday and has risen to fresh two-week highs, around the $ 1,919 region in the last hour.

Following good price movements in both directions the day before, the precious metal managed to regain positive traction on Thursday, supported by a softer tone around the US dollar. The anticipated victory of Democratic candidate Joe Biden has kept the USD bulls on the defensive, which in turn has been seen as a key factor that has benefited the prices of gold, denominated in dollars.

Meanwhile, the current president Donald Trump has already filed lawsuits and a new tally in key battlefield states that he narrowly lost. This is due to the fact that the outcome still depends on the vote count of a few remaining swing states. The greatest uncertainty could drag on for days or even weeks and extend some additional support to safe haven gold.

Aside from this, the current drop in US Treasury yields has further contributed to spur some money flows into the yellow metal. Having said that, the failure of the so-called Democratic “blue wave” in the US Congress has reduced the prospects for large stimulus packages to help the economy affected by COVID-19. This, coupled with market optimism, could limit any further gains for the XAU / USD..

Investors may also be reluctant to position aggressively, preferring to wait on the sidelines before the latest FOMC monetary policy update, scheduled to be announced during today’s US session. Meanwhile, the release of the usual weekly US initial jobless claims data could generate some short-term business opportunities.