Gold sticks to gains near session tops, above $1660 level
- Gold regains some positive traction on Wednesday and recovers a part of the overnight slide.
- A fresh leg down in the equity markets/US bond yields revived demand for safe-haven assets.
- Renewed USD weakness provided an additional boost to the metal and remained supportive.
Gold edged higher through the early European session on Wednesday and climbed to fresh daily tops, around the $1666-67 region in the last hour.
A combination of supporting factors assisted the precious metal to regain some positive traction on Wednesday and recover a part of the previous session's negative move, led by resurgent US dollar demand and a strong recovery in the global risk sentiment.
The greenback made a solid comeback on Tuesday amid hopes of fiscal stimulus by the Trump administration. The market reacted positively to the news and was evident from a bullish mood across the global equity markets, which exerted some pressure on the commodity.
However, doubts over the US President Donald Trump's proposed economic stimulus package, coupled with persistent worries about the impact of the coronavirus epidemic continued weighing on investors' sentiment and revived demand for traditional safe-haven assets.
The anti-risk flow was evident from a fresh leg down in the US equity futures and the US Treasury bond yields, which provided an additional boost to the non-yielding yellow metal. Meanwhile, some renewed USD weakness further underpinned demand for the dollar-denominated commodity.
It will now be interesting to see if bulls are able to capitalize on the move or opt to lighten their positions as the focus now shifts to the US budget for fiscal 2021, which might provide further details about the administration's new policies and provide a fresh directional impetus.
Technical levels to watch