- Gold edged higher on Wednesday and recovered further from over one-week lows.
- A modest USD pullback extended some support to the dollar-denominated commodity.
- Improving global risk sentiment might turn out to be a key factor capping further gains.
Gold spiked to fresh session tops in the last hour, with bulls now awaiting some follow-through strength beyond the $1700 round-figure mark.
Following a brief consolidation through the Asian session, the precious metal regained some positive traction and built on the previous day’s late rebound from the $1660 region, or near two-week lows.
The US dollar edged lower in the wake of the latest optimism over the passage of $484 billion stimulus package and was seen as one of a key factor that benefitted the dollar-denominated commodity.
Apart from a modest USD weakness, the uptick lacked any major catalyst and remained capped amid an improvement in the global risk sentiment, which undermines the precious metal’s safe-haven demand.
The positive move around the equity markets was being supported by indications that the pandemic might be reaching its peak soon and the US President Donald Trump’s readiness to re-open the economy.
The risk-on mood was reinforced by a modest pickup in the US Treasury bond yields, which might further contribute towards keeping a lid on any runaway rally for the non-yielding yellow metal, at least for now.
Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move, possibly towards retesting the $1725-27 supply zone.
Technical levels to watch
