Gold Price Analysis: XAU/USD Holds Steady Above $1865 Level, Lacks Follow Through

Gold seesawed between tepid gains/minor losses through the early European session and was last seen trading around the $1865 region, nearly unchanged for the day.

The precious metal failed to capitalize on the previous day's late rebound from the vicinity of the $1850 support area and remained confined in a range amid conflicting signals from the US regarding COVID-19 stimulus. Reports indicated that US Senate Republican and Democrat leaders had agreed to resume negotiations on another coronavirus stimulus package. This, in turn, kept a lid on any meaningful upside for the XAU/USD.

The positive development, to a larger extent, was offset by the US Treasury Secretary Steven Mnuchin's decision to end some of the pandemic relief for struggling businesses. The announcement took its toll on the global risk sentiment and was evident from a fresh leg down in the equity markets. The anti-risk flow, along with a subdued US dollar price action extended some support to the dollar-denominated commodity and helped limit the downside.

Growing market worries about the economic fallout from the imposition of new COVID-19 restrictions in several US states have been fueling speculations for additional monetary easing by the Fed. This was evident from the ongoing slide in the US Treasury bond yields, which further benefitted the non-yielding yellow metal. That said, the lack of any meaningful buying interest warrants some caution for aggressive bullish traders.

There isn't any major market-moving economic data due for release from the US on Friday. This further makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD has formed a strong base near the $1850 region and positioning for any further appreciating move.

Technical level to watch

Source: https://www.fxstreet.com/news/...