Gold Price Analysis: XAU/USD edges higher to $1950 area amid weaker USD
· Gold edged higher during the early European session and refreshed daily tops, closer to the $1950 level in the last hour.
· Following a brief consolidation through the early part of the trading action on Monday, the precious metal managed to regain some positive traction amid the emergence of some selling around the US dollar. The impasse over the next round of the US fiscal stimulus, along with concerns about the US economic recovery held the USD bulls on the defensive and benefitted the dollar-denominated commodity.
· Apart from this, a weaker tone surrounding the US Treasury bond yields extended some additional support to the non-yielding yellow metal. The uptick, however, lacked any strong follow-through and the commodity remained well within a three-day-old trading range. A combination of factors failed to impress bullish traders and capped the upside for the commodity, at least for the time being.
· Meanwhile, the global risk sentiment got a minor lift amid hopes for a new treatment for the highly contagious coronavirus disease. The US FDA gave an emergency use approval for a new potential treatment that uses blood plasma from patients who have recovered from the virus to treat COVID-19. This, in turn, undermined demand for traditional safe-haven assets, including gold.
· Investors might also be reluctant from placing any aggressive directional bets, rather prefer to wait on the sidelines ahead of the Fed Chair Jerome Powell speech during the Jackson Hole symposium later this week. This makes it prudent to wait for a sustained strength beyond Friday's swing high, around the $1955-56 region, before positioning for any further intraday appreciating move.
· “The U.S. central bank should reiterate its pledge for ultra-low rates, providing some support for gold,” Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.
· “The central bank may be expected to signal greater tolerance for above-target inflation keeping real interest rates low.”
· Elsewhere, silver dropped 0.7% to $26.50 per ounce, platinum dipped 0.4% to $915.35, and palladium fell 1.3% to $2,154.28.
Reference: FXStreet, CNBC
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