Gold Price Analysis: XAU/USD flirts with session lows, around $1725-20 region


  • A combination of factors prompted some fresh selling around gold on Wednesday.
  • The risk-on mood was seen as a key factor weighing on the safe-haven commodity.
  • An uptick in the US bond yields underpinned the USD and added to the selling bias.

Gold maintained its offered tone through the mid-European session and refreshed daily lows, around the $1721 region in the last hour.

The XAU/USD came under some renewed selling pressure on Wednesday and erased the previous day's modest recovery gains from the lowest level in over eight months. The safe-haven precious metal was weighed down by the underlying bullish tone in the financial markets, bolstered by the optimism about a strong global economic recovery.

Apart from this, a sudden pick up in the US Treasury bond yields exerted additional downward pressure on the non-yielding yellow metal. The US bond market has been reacting to the reflation trade, which has been fueling speculations for an uptick in inflation and doubts that the Fed would retain ultra-low rates for a longer period.

Meanwhile, a fresh leg up in the US bond yields assisted the US dollar to regain positive traction. The greenback was further supported by the upbeat US economic outlook amid the progress on COVID-19 vaccinations and a massive US fiscal spending plan. This was seen as another factor driving flows away from the dollar-denominated commodity.

It will now be interesting to see if the XAU/USD is able to attract any buying interest or bearish traders aim to challenge the $1700 mark as the focus now shifts to the US macro data. Wednesday's US economic docket highlights the releases of the ADP report on private-sector employment and ISM Services PMI for February.

The data, along with the US bond yields, would influence the USD price dynamics. Apart from this, the broader market risk sentiment will further contribute to produce some short-term trading opportunities around the XAU/USD.

Technical levels to watch

XAU/USD

Overview
Today last price 1724.26
Today Daily Change -8.90
Today Daily Change % -0.51
Today daily open 1733.16
 
Trends
Daily SMA20 1795.4
Daily SMA50 1839.57
Daily SMA100 1854.61
Daily SMA200 1860.36
 
Levels
Previous Daily High 1738.56
Previous Daily Low 1707.28
Previous Weekly High 1816.07
Previous Weekly Low 1717.24
Previous Monthly High 1871.9
Previous Monthly Low 1717.24
Daily Fibonacci 38.2% 1726.61
Daily Fibonacci 61.8% 1719.23
Daily Pivot Point S1 1714.11
Daily Pivot Point S2 1695.05
Daily Pivot Point S3 1682.83
Daily Pivot Point R1 1745.39
Daily Pivot Point R2 1757.61
Daily Pivot Point R3 1776.67

 

 

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