- The risk-on mood, rallying US bond yields prompted fresh selling around gold on Tuesday.
- A softer tone surrounding the USD extended some support and helped limit deeper losses.
Gold maintained its offered tone through the first half of the European session and was last seen trading near the lower end of its daily range, around the $1850 region.
The precious metal witnessed some selling on Tuesday and retreated further from the $1875-76 resistance zone touched in the previous session. The downfall was exclusively sponsored by the prevalent upbeat market mood, which tends to undermine demand for traditional safe-haven assets, including gold.
The global risk sentiment got a strong lift amid renewed optimism over a massive US fiscal stimulus and hopes for a stronger global economic recovery. Democrat lawmakers on Monday filed the $1.9 trillion budget measure – a step toward bypassing Republicans and getting the legislation passed in the US Congress.
Meanwhile, the risk-on flows, along with expectations of a larger government borrowing triggered a fresh leg up in the US Treasury bond yields. This was seen as another factor exerting pressure on the non-yielding yellow metal. However, fresh selling around the US dollar extended some support to the dollar-denominated commodity.
From a technical perspective, the XAU/USD, so far, has managed to defend a short-term ascending trend-line support. The mentioned trend-line extends from January monthly swing lows, around the $1800 level, which if broken decisively will set the stage for a further near-term depreciating move for the commodity.
There isn't any major market-moving economic data due for release on Tuesday. Hence, the broader market risk sentiment will play a key role in influencing the safe-haven XAU/USD. Apart from this, the US bond yields and the USD price dynamics will also be looked upon to grab some short-term trading opportunities.
Technical levels to watch
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