- A combination of factors helped gold reverse an initial slide to the $ 1,936 zone.
- Political uncertainty in the United States weighed on the dollar and remained favorable.
- A modest pullback in equity markets further benefited the safe haven metal.
The oro it held steady near multi-week highs, just below the $ 1,960 region during the early days of the US session and had a rather subdued reaction to the monthly US employment report.
After an initial drop to the $ 1,936 zone, the precious metal managed to regain some positive traction on the last trading day of the week and built on the strong positive move from the previous session. The momentum was supported by the predominant selling bias of the US dollar, which tends to prop up dollar-denominated commodities, and received an additional boost from a modest pullback in equity markets.
The final outcome of a US presidential election remains unclear two days after the polls closed on Wednesday and is dependent on the vote count of the few states left on the battlefield. Yet the markets have bet that Democratic candidate Joe Biden will become the next president of the United States. That said, the uncertainty of the US political landscape continued to put some pressure on the dollar.
On the economic data front, the NFP report came to show that the US economy added 638,000 new jobs in October compared to 600,000 expected. Additionally, the prior month’s reading was also revised up to 672,000 from 661,000 previously reported. More details revealed a significant drop in the unemployment rate, which fell to 6.9% from 7.9% previously, although it failed to impress the USD bulls.
The high degree of uncertainty could be prolonged by the possibility of a legal battle. Added to this, the diminishing hopes of large US fiscal stimulus packages to support the economy took its toll on global risk sentiment. Risk appetite was evident from weaker trade sentiment around US equity futures, providing additional boost to the yellow metal’s perceived safe-haven status.
Now it will be interesting to see if the XAU / USD you can capitalize on the positive move or if the bulls choose to take some profits off the table. However, the focus will remain on American political developments. Apart from this, the broader market risk sentiment will play a key role in influencing the XAU / USD and help traders seize some significant opportunities.
Credits: Forex Street
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