- Gold edged higher for the second consecutive session amid a softer tone around the USD.
- Retreating US bond yields undermined the greenback and benefitted the non-yielding metal.
- The bullish sentiment might keep a lid on any further gains for the safe-haven commodity.
Gold traded with a mild positive bias through the early European session and was last seen hovering near the top end of its weekly trading range, around the $1860 region.
Following the previous day's modest pullback from the vicinity of 50-day SMA, the precious metal managed to regain positive traction and edged higher for the second consecutive session on Wednesday. The uptick was supported by a softer tone surrounding the US dollar, which tends to benefit dollar-denominated commodities, including gold.
The recent strong rally in the US Treasury bond yields started losing steam in reaction to the strong demand seen at a $38 billion 10-year auction overnight and dovish comments from Fed officials. Policymakers toned down talks of tapering the asset purchase program and reiterated that the policy is going to stay supportive.
In fact, the yield on the benchmark 10-year US government bond eased further from the highest level in almost a year and kept the USD bulls on the defensive. That said, expectations of a larger government borrowing could limit the ongoing pullback in the US bond yields and keep a lid on any further gains for the non-yielding yellow metal.
Investors have been pricing in prospects for a more aggressive US fiscal spending following the Democratic sweep in the US Senate runoff elections in Georgia. Apart from this, hopes for a strong global economic recovery remained supportive of the underlying bullish tone and further contributed to cap the upside for the safe-haven XAU/USD.
Hence, any further positive move is more likely to confront a stiff resistance and remain capped near the $1885-90 congestion zone, which coincides with the very important 200-day SMA. A convincing breakthrough, leading to a subsequent strength beyond the $1900 mark will negate the negative bias and pave the way for additional gains.
Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. The data, along with the US bond yields, will influence the USD price dynamics. Apart from this, the broader market risk sentiment will also be looked upon for some short-term trading opportunities around the XAU/USD.
Technical levels to watch
|Today last price||1860.1|
|Today Daily Change||4.18|
|Today Daily Change %||0.23|
|Today daily open||1855.92|
|Previous Daily High||1863.83|
|Previous Daily Low||1836.74|
|Previous Weekly High||1959.42|
|Previous Weekly Low||1828.27|
|Previous Monthly High||1906.87|
|Previous Monthly Low||1775.52|
|Daily Fibonacci 38.2%||1853.48|
|Daily Fibonacci 61.8%||1847.09|
|Daily Pivot Point S1||1840.5|
|Daily Pivot Point S2||1825.07|
|Daily Pivot Point S3||1813.41|
|Daily Pivot Point R1||1867.59|
|Daily Pivot Point R2||1879.25|
|Daily Pivot Point R3||1894.68|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.