• Gold failed to capitalize on its early uptick to over two-week tops, around the $1872 region.
• A modest pickup in the USD demand was seen as a key factor exerting pressure on the metal.
• Hopes for more US fiscal stimulus might attract some dip-buying and help limit the downside.

Gold surrendered a major part of its intraday gains to over two-week tops and was last seen trading just above the $1860 level, nearly unchanged for the day.

The precious metal gained some traction through the first half of the trading action on Tuesday and built on the overnight solid intraday rebound of around $50 from the vicinity of the $1820 region. The uptick marked the fifth day of a positive move in the previous six and was supported by a softer risk tone, which tends to underpin demand for traditional safe-haven assets, including gold.

Despite the rollout of a vaccine for the highly contagious coronavirus disease, worries around the continuous surge in new cases weighed on investors' sentiment. This was evident from a weaker trading sentiment around the equity markets. The supporting factor, to a larger extent, was offset by a modest pickup in the US dollar demand, which capped the upside for the dollar-denominated commodity.

Meanwhile, the downside remains cushioned, at least for the time being, amid expectations that US lawmakers will agree to an emergency coronavirus stimulus plan. Hence, a subsequent pullback to the $1855-53 region might still be seen as a buying opportunity. This, in turn, should help limit the downside for the non-yielding yellow metal amid absent market-moving economic releases from the US.

Technical levels to watch