Gold Price Analysis: XAU/USD struggles to capitalize on intraday recovery


  • Gold witnessed a modest recovery from multi-month lows touched earlier this Tuesday.
  • Sustained USD buying interest kept a lid on any meaningful upside for the commodity.
  • The lack of any strong follow-through buying supports prospects for further weakness.

Gold struggled to capitalize on its goodish intraday bounce from multi-month lows and was last seen trading with modest gains of around 0.20%, just below the $1730 level.

The precious metal managed to find some support near the $1707 area and staged a modest bounce from the lowest level since mid-June 2020. Given that the recent violent selloff in the US bond market has eased, slightly oversold conditions on short-term charts seemed to be the only factor that prompted some short-covering around the non-yielding yellow metal.

This, along with a cautious mood in the equity markets, extended some additional support to the safe-haven XAU/USD. The supporting factors, to a larger extent, were negated by some follow-through US dollar buying, which tends to undermine demand for dollar-denominated commodity and kept a lid on any meaningful upside for the XAU/USD.

The greenback remained well supported by the upbeat US economic outlook, bolstered by the impressive pace of COVID-19 vaccinations and the progress on a massive US fiscal spending plan. The reflation trade has been fueling doubts that the Fed would retain ultra-low rates for a longer period, which was seen as another factor capping gains for gold.

From a technical perspective, the metal's inability to gain any meaningful traction suggests that the near-term bearish trend might still be far from being over. This makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD has bottomed out in the near-term and positioning for any further recovery.

There isn't any major market-moving economic data due for release from the US on Tuesday. Hence, the US bond yields, the USD price dynamics and the broader market risk sentiment will play a key role in influencing the XAU/USD.

Technical levels to watch

XAU/USD

Overview
Today last price 1727.48
Today Daily Change 3.72
Today Daily Change % 0.22
Today daily open 1723.76
 
Trends
Daily SMA20 1800.54
Daily SMA50 1842.14
Daily SMA100 1856.19
Daily SMA200 1860.25
 
Levels
Previous Daily High 1759.98
Previous Daily Low 1719.72
Previous Weekly High 1816.07
Previous Weekly Low 1717.24
Previous Monthly High 1871.9
Previous Monthly Low 1717.24
Daily Fibonacci 38.2% 1735.1
Daily Fibonacci 61.8% 1744.6
Daily Pivot Point S1 1708.99
Daily Pivot Point S2 1694.23
Daily Pivot Point S3 1668.73
Daily Pivot Point R1 1749.25
Daily Pivot Point R2 1774.75
Daily Pivot Point R3 1789.51

 

 

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