- Gold has quickly reversed an intraday slide to the $ 1,850 region amid the prevailing cautionary sentiment.
- Nerves surrounding COVID-19 weigh on investor sentiment and provide a modest rally in XAU / USD.
- A rally in the USD could limit gains in dollar-denominated gold, at least for now.
The price of oro has soared around $ 15 during the European session on Monday, rising to new Daily highs near the $ 1,865-66 region. At the time of writing, prices are slightly off from the highs, but remain positive above $ 1,860.
Precious metal has managed to attract some purchases near the region of $ 1,850 and now looking to take advantage of the good bounce of the previous day from the region of $ 1,837. Investors have been cautious after the disappointing release of IFO’s German business survey. This, in turn, has been seen as one of the key factors that has provided a modest boost to the safe-haven XAU / USD.
In the context of a delay in the supply of vaccines, Monday’s data has further fueled the concerns about the possible economic consequences of the increase in the number of coronavirus cases and they have weighed on investor sentiment. The risk-off money flow has been bolstered by an intraday pullback in US Treasury yields, providing an additional boost to the yellow metal.
Supporting factors, to some extent, have been seen offset by a rally in the US dollar. This has been seen as one of the key factors that have limited gold earnings, denominated in dollars, at least for the moment. This makes it prudent to wait for some solid continuation buying before positioning itself for the resumption of last week’s bounce from around the $ 1,800 level.
In the absence of major economic releases from the US, events related to the coronavirus saga will play a dominant role in influencing overall market risk sentiment. Apart from this, the USD price dynamics could generate some short-term trading opportunities around the XAU / USD.
Meanwhile, the key focus of attention will remain the latest monetary policy update from the FOMC on Wednesday. This will be followed by the preliminary US Q4 GDP report, which should help investors determine the next directional move in gold prices.
Technical levels of gold
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