Gold slumped on stronger US Dollar amid higher US Treasury yields
- Gold under pressure on broad recovery in USD.
- All eyes may be now on US Treasury auctions for USD trajectory.
Gold is now trading around $1343, in pre-New York session, slumped by almost 1% on a broader recovery in the US dollar amid higher US bond yields ahead of a deluge of US Treasury auctions later in the day. The US Dollar was boosted on Tuesday by higher US bond yields as US Treasury is set to auction $179 bln worth of short-term securities. The recent spate of soft treasury auctions was one of the primary reasons behind the surge in bond yields.
The market may be also assuming that around 3% of the US bond yields, the underlying bond prices may be near a bottom and thus the Treasury auction could be decent, which is positive for USD on fund-inflow narrative. The US bond yield curve may again start to flatten after recent steepening amid concern of dual US deficits and higher inflation.
Gold is also under pressure on muted demand from India due to a widespread crackdown on unaccounted money despite it’s a marriage season. Also, Chinese buying may be slowing down as the auspicious Lunar New Year celebration is coming to close by this week. On the other side, the yellow metal is also being supported by various geopolitical worries and concern over higher inflation as it’s being treated as inflation hedged physical asset for decades.
Technically, for Gold, 1,335 area is now immediate support and sustaining below that 1,325-1,315 and 1,305-1,285 zones may be visible soon. For any meaningful recovery, Gold must stay above 1,356-1,366 price zone.
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