Gold spikes to 1-week tops, just above $1630 level

• Gold caught some fresh bids and built on the gains recorded over the past three sessions.
• The momentum seemed rather unaffected by a strong recovery in the global risk sentiment.
• A goodish pickup in the US bond yields also did little to hinder the intraday positive move.

Gold finally broke out of its Asian session consolidation phase and spiked to one-week tops, around the $1632 region in the last hour.

Following an early dip to the $1609 area, the precious metal caught some fresh bids and built on its positive move witnessed over the past three trading session. The momentum seemed rather unaffected by a combination of factors and could be solely attributed to some technical buying above a one-month-old descending trend-line.

Bulls shrugged off a solid recovery in the global risk sentiment, supported by a slowdown in the number of deaths from COVID-19 and which tends to undermine the metal's perceived safe-haven demand. The risk-on flow was further reinforced by a strong pickup in the US Treasury bond yields, albeit did little to influence the non-yielding commodity.

Meanwhile, the commodity on Friday managed to find acceptance above a short-term descending trend-line resistance. This comes amid a subdued US dollar price action, which extended some support to the dollar-denominated commodity and turned out to be the only factor prompting some short-covering move on the first trading day of the new week.

It will now be interesting to see if the uptick is also backed by any genuine buying or is just a stop-run, which runs the risk of fizzling out rather quickly amid absent relevant market moving economic releases from the US. Hence, it will be prudent to wait for some follow-through buying before positioning for any further appreciating move.

Technical levels to watch