- A combination of factors assisted the commodity to gain traction for the fifth straight session.
- A modest USD rebound from lows prompted some profit-taking amid overbought conditions.
Gold surrendered a major part of its intraday gains to fresh multi-year tops and has now retreated back below the $1775 level.
The precious metal prolonged its recent strong bullish trajectory and continued gaining traction for the fifth consecutive session. Concerns that the ever-increasing COVID-19 cases could delay the economic recovery and worsening US-China relations continued benefitted the commodity's perceived safe-haven status.
Diplomatic tensions between the world's two largest economies escalated further after the US ordered China to close its consulate in Houston by Friday amid accusations of spying. China's foreign ministry condemned the move as “political provocation” and was reportedly closing the US consulate in Wuhan in retaliation.
The yellow metal shot to the highest level since September 2011 but started losing momentum just ahead of the $1890 level. A sudden pickup in the US dollar demand – though lacked any obvious catalyst – seemed to be the only factor that prompted some profit-taking amid extremely overstretched conditions on short-term charts.
That said, any meaningful pullback might still be seen as a buying opportunity and is more likely to remain limited. The impasse over the next round of the US fiscal stimulus measured might hold investors from placing any aggressive USD bulls and extend some support to the dollar-denominated commodity.
Technical levels to watch
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