- A strong pickup in the USD demand exerted fresh pressure on the dollar-denominated commodity.
- A selloff in the equity markets might lend some support to the safe-haven gold and help limit losses.
- Bearish traders might wait for a sustained break below 100-day SMA before placing aggressive bets.
Gold edged lower during the first half of the European trading session and was last seen trading near daily lows, just above the $1900 level.
The precious metal witnessed some fresh selling on Wednesday and reversed the previous day's positive move, albeit remained well within a four-day-old trading range. A strong pickup in the US dollar demand was seen as a key factor exerting some pressure on the dollar-denominated commodity.
The alarming pace of growth in new coronavirus cases and the imposition of fresh lockdown restrictions fueled concerns that the economic growth will weaken again. This, along with the uncertainty about the actual outcome of the US election, forced investors to unwind their USD bearish bets.
Apart from this, the lack of progress in the US stimulus talks further dampened the market mood. This was evident from a steep decline in the equity markets. The anti-risk flow did little to revive the precious metal's safe-haven demand, albeit could possibly help limit any deeper losses.
Moreover, growing wariness about the US presidential election might further help limit any large movements and extend some support to the XAU/USD. This makes it prudent to wait for some strong follow-through selling before positioning for any further near-term depreciating move.
From a technical perspective, any meaningful slide below the $1900 mark is more likely to attract some buying near 100-day SMA. The latter is currently pegged near the $1886-85 region, which if broken decisively will be seen as a fresh trigger for bearish traders and prompt some technical selling.
There isn't any major market-moving economic data due for release on Wednesday. Hence, the broader market risk sentiment, developments surrounding the coronavirus saga, along with the USD price dynamics will be looked upon to grab some short-term trading opportunities.
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: The bearish outlook remains in play below 1.2700
The GBP/USD pair edges lower to near 1.2675, the lowest level since August during the Asian trading hours on Friday. The cautious remarks from the Federal Reserve Chair Jerome Powell on Thursday and stronger US economic data boost the US Dollar broadly and weigh on the major pair.
EUR/USD rises to near 1.0550 after rebounding from yearly lows
EUR/USD breaks its five-day losing streak, trading around 1.0540 during the Asian session on Friday. This rebound is likely due to a downward correction in the US Dollar following comments from Fed Chair Jerome Powell.
Gold defends key $2,545 support; what’s next?
Gold price is looking to build on the previous rebound early Friday in search of a fresh impetus amid persistent US Dollar buying and mixed activity data from China.
Bitcoin to 100k or pullback to 78k?
Bitcoin and Ethereum showed a modest recovery on Friday following Thursday's downturn, yet momentum indicators suggest continuing the decline as signs of bull exhaustion emerge. Ripple is approaching a key resistance level, with a potential rejection likely leading to a decline ahead.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
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.