The price of gold made a modest rally on Tuesday afternoon, gaining 0.25% to $1,840.91 per ounce after lunchtime, following a turbulent few weeks which saw the precious metal take a -2.31% hit.

Responsibility for the uptick, analysts at FX Street say, is “exclusively sponsored by the emergence of some selling around the US dollar, which tends to underpin demand for the dollar-denominated commodity”.

The greenback slipped in morning trading as investors awaited comments from U.S. Treasury Secretary nominee Janet Yellen “to talk up the need for major fiscal stimulus”.

After a 2% rise in the dollar so far in 2021, a surprise for many investors who had bet on the currency’s decline following its weakness in 2020, analysts are now projecting a weaker greenback from here on out – which usually works in gold’s favour.

Nevertheless, the prevailing upbeat market sentiment stopped bullish traders from placing any aggressive bets, and might rule out any strong rally for gold in the near future.

Global risk sentiment remains “well supported” by the optimism over the rollout of COVID-19 vaccines around the world as well as hopes for more aggressive fiscal spending under Joe Biden’s presidency, which could cap gold’s gains in the coming weeks.

Investors might prefer to wait on the sidelines, FX Street stated, ahead of President-elect Joe Biden’s inauguration on Wednesday. It might take a few days for markets to settle on a coordinated response, and analysts suggest it would be “prudent to wait for some strong follow-through buying” before hedging bets on any further appreciating move.

“In the absence of any major market-moving economic releases, traders will look forward to US Treasury Secretary nominee Janet Yellen’s confirmation hearing for some impetus. This, along with the broader market risk sentiment, might further contribute to produce some short-term trading opportunities around the XAU/USD”.