- Gold achieves some positive traction on Tuesday and recovers some of the previous day’s decline.
- A pullback in stock markets and in US bond yields offers some support for the yellow metal.
- Dovish USD demand remains supportive, although vaccine optimism could limit the rise.
The prices of the gold They move higher during the European session on Tuesday, climbing towards the $ 1,890 level and holding near the upper end of its daily range at the time of writing. Precious metal is steadily recovering from lows of more than a month reached the previous day at $ 1,850.
A combination of support factors has helped the precious metal to achieve some positive traction on Tuesday and to recover some of the previous day’s slide to lows of more than a month. A promising development in COVID-19 vaccine trials In the final stage, the confidence of investors increased and weighed heavily on traditional safe haven assets, like gold.
In fact, pharmaceutical giant Pfizer announced on Monday that its experimental vaccine, developed jointly with BioNTech, was more than 90% effective in preventing COVID-19. In addition, the recovery in risk appetite triggered a surge in US Treasury bond yields, further helping to shift money flows away from the yellow metal.
However, investors remain skeptical about the efficacy and duration of the immunity provided by the vaccine. The nervousness has been made evident by a modest pullback in stock markets and a further downward movement in US bond yields. This, in turn, has been seen as one of the key factors that have benefited the safe-haven XAU / USD and it has continued to be supportive.
Apart of this, a subdued action in the price of the US dollar has offered some additional support to gold prices, denominated in dollars. As investors absorb Joe Biden’s victory in the US presidential election, the possibility of a divided Congress has dimmed the prospects for large stimulus packages and it has been fueling speculation about further monetary easing by the Fed.
That said, a breakthrough in the fight against the coronavirus could have revived hopes for a rapid global economic recovery and could limit strong gains for the XAU / USD. This makes it prudent to wait for some subsequent purchases above the $ 1,900 level before positioning for any further bullish movement.
Credits: Forex Street
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