Gold Price Analysis: XAU/USD trades with modest losses, just below $1890 level

• Gold once again faced rejection near the $1900 mark amid the prevalent risk-on mood.
• Sustained USD selling should help limit losses for the dollar-denominated commodity.

Gold traded with a negative bias through the early European session and was last seen hovering near the lower end of its daily trading range, just below the $1890 level.

The precious metal continued with its struggle to move past the $1900 mark, instead witnessed some fresh selling and for now, seems to have snapped two consecutive days of winning streak. The rejection slide was exclusively sponsored by the prevalent risk-on environment, which tends to undermine demand for the traditional safe-haven XAU/USD.

The global risk sentiment remained well supported by the likelihood of additional US financial aid and hopes for a strong economic recovery in 2021. Meanwhile, the regulatory approval of AstraZeneca/Oxford COVID-19 vaccine offset concerns about a surge in cases infected by the new coronavirus strain and remained supportive of the upbeat market mood.

That said, a softer tone surrounding the US dollar extended some support to the dollar-denominated commodity and might help limit the downside, at least for the time being. The USD Index languished near multi-year lows and warrants some caution before positioning for any further weakness for the XAU/USD amid typical year-end thin trading volumes.

Moving ahead, Thursday's US economic docket – highlighting the only release of usual Initial Weekly Jobless Claims – will be looked upon for some impetus. This, along with the USD price dynamics and the broader market risk sentiment, might assist traders to grab some short-term opportunities on New-year's eve.

Technical levels to watch