- Gold witnessed some profit-taking on Friday amid a modest USD short-covering bounce.
- The underlying cautious mood around the equity markets might help limit the downside.
Gold remained depressed through the first half of the European session and was last seen hovering near daily lows, around the $1880 region.
The precious metal edged lower on the last trading day of the week and retreated further from the vicinity of the $1900 mark, or one-month tops touched on Thursday. Given that the US congressional negotiators are yet to agree over a new coronavirus-relief package, the US dollar witnessed some short-covering bounce amid near-term oversold conditions. This, in turn, was seen as one of the key factors that exerted some downward pressure on the dollar-denominated commodity.
Meanwhile, the downside seems cushioned amid the underlying cautious mood around the equity markets, which tends to benefit the safe-haven XAU/USD. Reuters reported that the US is set to add dozens of Chinese companies, including SMIC, to a trade blacklist. Furthermore, Britain and the European Union struck a downbeat tone about the likelihood of a post-Brexit trade deal. The not so optimistic developments weighed on investors' sentiment and should help limit deeper losses.
Gold, for now, seems to have snapped three consecutive days of the winning streak. However, it will still be prudent to wait for some strong follow-through selling before confirming that this week's positive move has run out of the steam and positioning for any further downside for gold. There isn't any market-moving economic data due for release from the US on Friday. This leaves the yellow metal at the mercy of the USD price dynamics and the broader market risk sentiment.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD holds recovery gains above 1.2900 ahead of BoE policy decision
GBP/USD builds its recovery momentum above 1.2900 in European trading on Thursday, moving away from its lowest level since mid-August. Traders adjust their positions ahead of the key BoE and Fed monetary policy announcements.
EUR/USD stays firm near 1.0750 amid US Dollar pullback
EUR/USD holds higher ground near 1.0750 in the European session on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trunp win-inspired USD longs ahead of all-important Fed policy announcements.
Gold price faces challenges due to decline in safe-haven flows, awaits Fed rate decision
Gold price (XAU/USD) faced challenges as the dollar-denominated precious metals struggled due to a stronger US Dollar (USD) following the victory of former President Donald Trump in the US election.
BoE set for a second interest rate cut this year on Thursday
Market consensus points to further easing by the Bank of England's (BoE) upcoming interest rate decision on Thursday. The BoE has held rates steady at 5.00% in the previous gathering, but shifting investor sentiment now suggests a possible 25-basis-point cut this week.
Trump wins: Tax cuts come with a cost
Donald Trump’s victory will ensure a lower tax environment that should boost sentiment and spending in the near term. However, promised tariffs, immigration controls and higher borrowing costs will increasingly become headwinds through his presidential term.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.