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19 Oct 2020

Gold refreshes session tops near $1911-12 region; upside seems limited

  • A softer tone surrounding the USD assisted gold to regain positive traction on Monday.
  • The risk-on mood, a pickup in the US bond yields might keep a lid on any strong gains.
  • Bulls might wait for a sustained move beyond a two-month-old descending trend-line.

Gold edged higher through the early European session on Monday and was last seen hovering near the top end of its daily trading range, around the $1910-11 region.

The precious metal managed to regain positive traction on the first day of a new week and has now reversed the previous day's negative move. A mildly softer tone surrounding the US dollar was seen as one of the key factors that extended some support to the dollar-denominated commodity.

This comes on the back of an uncertain US political situation, which further benefitted the precious metal's perceived safe-haven status. However, a combination of factors might keep a lid on any runaway rally for the XAU/USD, warranting some caution before placing aggressive bullish bets.

A strong pickup in the US Treasury bond yields might help limit any meaningful downside for the greenback. Adding to this, concerns about the second wave of coronavirus infections and renewed lockdown measures might continue to benefit the USD's status as the global reserve currency.

Apart from this, the prevalent risk-on mood – amid reviving hopes for additional US fiscal stimulus measures – might further collaborate towards capping gains for the non-yielding yellow metal.

Even from a technical perspective, the XAU/USD has repeatedly failed near a resistance marked by a two-month-old descending trend-line. Hence, any subsequent move up runs the risk of fizzling out rather quickly amid absent relevant market-moving economic releases from the US.

Meanwhile, the Fed Chair Jerome Powell's scheduled speech might influence the intraday momentum and assist traders to grab some meaningful opportunities later during the early North American session.

Technical levels to watch

 

Oct 19, 2020

USD/JPY risks extra downside below 104.70 – UOB

In opinion of FX Strategists at UOB Group, USD/JPY is posed to extend the decline if 104.70 is cleared in the next weeks. Key Quotes 24-hour view: “We
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Oct 19, 2020

US Dollar Index turns negative near 93.60 ahead of Powell, Fedspeak

The greenback, when measured by the US Dollar Index (DXY), loses further momentum and drops to the 93.65/60 band following the opening bell in Europe
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