The USD index retreated decently amid improvement in risk sentiment across the financial markets
Gold prices stay on the offensive on Thursday, with the technical picture improving since yesterday’s bounce from the key moving averages. The XAUUSD pair extended gains to the $1,808 area before retreating in recent trading. Earlier, the yellow metal rallied due to a weaker dollar, as the USD index retreated decently in yesterday’s trading amid improvement in risk sentiment across the financial markets.
Today, however, the greenback tries to initiate a rebound from the 96.00 support, trimming previous losses. As such, the upside potential in gold prices seems to be limited from here. The bullion could get back below the $,1800 psychological level in the near term should the dollar see a more robust recovery. Later today, fresh economic data out of the United States could give a lift for the USD and this cap further gains in the gold market.
In other words, it looks like gold prices will struggle to challenge the December highs seen last week around $1,815 as the downside risks surrounding the dollar are limited for the time being. In a wider picture, the outlook for gold has improved somehow after the prices rebounded above the 20- and 200-SMAs that converge around $1,793.
The XAUUSD pair was last seen changing hands around $1,805, up just 0.2% on the day amid pre-Christmas light trading and year-end flows. On the upside, the next critical target for bulls is seen at the $1,820 figure. In the immediate term, the bullion could settle around $1,800 before deciding on the further direction, with the current technical picture looking neutral as long as the prices stay above $1,795.