Gold eases from 2-week tops, still well bid just below $1600 mark

• Gold extended its positive momentum for the third consecutive session on Tuesday.
• Broad-based USD weakness underpinned for the dollar-denominated commodity.
• The risk-on mood, rebounding US bond yields kept a lid on any runaway rally.

Gold maintained its strong bid tone through the mid-European session, albeit has retreated around $30 from intraday swing highs to the $1615 region.

The precious metal built on its recent recovery move from the $1450 strong horizontal support, or YTD lows and gained some strong follow-through traction for the third consecutive session on Tuesday.

Some aggressive US dollar long-unwinding, triggered by the Fed's open-ended and unlimited QE, turned out to be one of the key factors that provided a strong lift to the dollar-denominated commodity.

This was followed by reports that the US Senate and the Trump administration were close to reaching a bipartisan agreement on the massive coronavirus spending package and boosted investors’ confidence.

This was evident from a strong recovery in the global risk sentiment and reinforced by solid gains in the equity markets, which dampened demand for traditional safe-haven assets and capped the upside.

Meanwhile, the risk-on mood allowed the US Treasury bond yields to rebound swiftly on Tuesday, which further collaborated towards keeping a lid on any runaway rally for the non-yielding yellow metal.

The commodity trimmed a part of its early gains to near two-week tops and now seems to have stabilized just below the $1600 round-figure mark ahead of the flash US Manufacturing and Services PMIs.

Technical levels to watch