Gold Price Analysis: XAU/USD moves above $1870 level, eyeing monthly tops
|- Gold continued scaling higher for the third consecutive session on Thursday.
- Sustained USD selling bias was seen as a key factor driving the metal higher.
- The momentum seemed rather unaffected by the prevalent risk-on mood.
Gold gained traction for the third straight day and climbed to over one-week tops, just above the $1870 region during the early European session.
The precious metal built on this week's goodish bounce from the $1818 region, or two-week lows touched on Monday and continued scaling higher through the first half of the trading action on Thursday. The momentum was sponsored by the prevalent bearish sentiment surrounding the US dollar, which tends to benefit dollar-denominated commodities, including gold.
The USD bearish pressure remained unabated amid firming expectations for additional US fiscal stimulus measures. In fact, the US Congress was reportedly closing in on approving a $908 billion COVID-19 relief package ahead of Friday's looming deadline. This, along with the Fed's pledge to keep rates low, provided an additional boost to the non-yielding yellow metal.
The Fed, at the end of a two-day meeting on Wednesday, promised to keep interest rates near zero for years to come and continue its bond-buying program until the US economic recovery is secure. The supporting factors, to a larger extent, helped offset the optimism over COVID-19 vaccine rollouts and remained supportive of the ongoing positive move for the XAU/USD.
Meanwhile, the prevalent upbeat market mood, which tends to undermine demand for traditional safe-haven assets, did little to dent the bullish sentiment the precious metal. That said, bulls might still need to wait for some follow-through buying beyond monthly swing highs, around the $1875 region, before positioning for any further near-term appreciating move.
Thursday's US economic docket highlights the releases of the Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and housing market data. Surprisingly stronger readings could do little to provide any respite to the USD bulls, which, in turn, suggests that the path of least resistance for the XAU/USD remains to the upside.
Technical levels to watch
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