A more robust and decisive upside for the bullion will likely be capped by the ongoing rally in the US Treasury bond yields
Gold bounced marginally on Tuesday, licking its wounds following a four-day slump from two-month highs registered around $1,960 last week. The recent sell-off in the precious metal was due to a broad-based dollar rally amid oversold conditions.
As a result, the bullion dipped to early-December lows in the $1,817 area at the start of the week. Today, gold prices opened with a bullish gap, having regained the 200-DMA that represents the immediate support now. As of writing, the metal was changing hands around $1,855, slightly off intraday highs registered at $1,861 earlier in the day.
US stimulus expectations in combination with rising concerns related to the pandemic and a pause in the dollar rally favor the upside in the safe-haven yellow metal. Against this backdrop, the XAUUSD pair managed to snap a four-day losing streak, with political turmoil in Washington adding to a more upbeat sentiment surrounding the dollar-denominated commodity.
According to the latest developments, House Democrats plan to impeach the US President Donald Trump tomorrow unless he steps down or is removed before then. On the other hand, a more robust and decisive upside for the bullion will likely be capped by the ongoing rally in the US Treasury bond yields along with Joe Biden’s push for a multi-trillion-dollar stimulus package that supports upbeat sentiment in the global financial markets.
From the technical point of view, gold prices need to reclaim the 20- and 100-DMAs as support levels in order to regain upside ground and climb back above the $1,900 critical level. On the downside, the immediate support arrives at $1,838 where the mentioned 200-DMA lies. in a wider picture, the precious metal needs to hold above the $1,800 handle so that to avoid a deeper sell-off in the days to come.