- A combination of factors triggers new sales in gold on Wednesday.
- The prevailing risk appetite is considered the key factor that has limited the initial rise.
- A modest rally in US bond yields has put some pressure on gold prices.
The oro has struggled to capitalize on its initial rally to the $ 1,845 region and has fallen back to daily lows, around the region of $ 1,835-34, during the European session.
The metal Precious has gained some positive traction during the first half of Wednesday’s trading action and it has moved away from the lows of more than two weeks, around the region of $ 1,830 established the previous day. Nevertheless, the rally lacked a solid continuation and it has stopped fairly quickly near the $ 1,845 area.
The optimistic sentiment prevailing in the market it has been seen as one of the key factors that have weighed on the XAU / USD safe haven and limited the rally. Apart of this, a rebound in US Treasury yields, amid renewed optimism about massive US fiscal stimulus measures, has put some pressure on the yellow metal.
Global risk sentiment has risen after Democrats in Congress took first steps to promote the $ 1.9 trillion COVID-19 relief package proposed by President Joe Biden. Democrats unlocked a legislative tool to bypass Republicans and opened the debate on a 2021 fiscal budget resolution with coronavirus aid spending instructions.
What has further increased investor confidence has been the news that the Sputnik V coronavirus vaccine developed in Russia has shown an effectiveness rate of 91.6% in the phase 3 trial. Events have raised hopes for a strong global economic recovery and continued to support risk appetite money flows, which in turn tend to weigh on traditional safe-haven assets such as gold.
Meanwhile, the current rally in US bond yields has offered some support to the US dollar. This has been seen as another factor that has affected the demand for gold, denominated in dollars. A subsequent fall below the lows of the previous day, around the $ 1,830 area, should pave the way for a further short-term bearish move for the XAU / USD.
Market participants are now awaiting the release of the US ISM Services PMI, which could influence USD price dynamics and provide some momentum at the start of the American session today. Investors could follow the signs of general market risk sentiment, US stimulus news, and movement in US bond yields.
Technical levels of gold
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