• Gold comes under renewed selling pressure on Tuesday amid resurgent USD demand.
  • Aggressive Fed rate hike bets lift the US bond yields and continue to underpin the buck.
  • The risk-off impulse fails to lend support to the XAU/USD ahead of the FOMC meeting.

Gold meets with a fresh supply on Tuesday and extends its steady intraday descent through the early North American session. The XAU/USD is currently placed around the $1,660 level, down nearly 0.90% for the day, and remains well within the striking distance of its lowest level since April 2020 touched on Friday.

The US dollar catches aggressive bids and makes a solid comeback from a one-week low, which, in turn, is seen as a key factor exerting downward pressure on the dollar-denominated commodity. The Federal Reserve is widely expected to deliver a third successive super-sized 75 bps rate hike at the end of a two-day policy meeting on Wednesday. The markets have also been pricing in a smaller chance of a full 100 bps rate increase, which remains supportive of elevated US Treasury bond yields and continues to act as a tailwind for the buck.

In fact, the yield on the rate-sensitive two-year US government bond stands tall near its highest level since November 2007. Adding to this, the benchmark 10-year Treasury note reaches a level not seen since April 2011, which is seen as another factor that contributes to driving flows away from the non-yielding yellow metal. The intraday downfall seems rather unaffected by the risk-off impulse, which tends to offer some support to the safe-haven gold. This, in turn, suggests that the path of least resistance for the XAU/USD is to the downside.

Apart from the highly-anticipated FOMC decision, the focus will be on the updated economic projections, the so-called dot plot and Fed Chair Jerome Powell's comments at the post-meeting press conference. Investors will look for clues about the future rate hike path, which will influence the near-term USD price dynamics and help determine the next leg of a directional move for gold. Nevertheless, the fundamental backdrop still seems tilted in favour of bearish traders and any attempted recovery move might still be seen as a selling opportunity.

Technical levels to watch

XAU/USD

Overview
Today last price 1662.43
Today Daily Change -13.45
Today Daily Change % -0.80
Today daily open 1675.88
 
Trends
Daily SMA20 1713.76
Daily SMA50 1736.09
Daily SMA100 1783.63
Daily SMA200 1830.79
 
Levels
Previous Daily High 1680.02
Previous Daily Low 1659.71
Previous Weekly High 1735.17
Previous Weekly Low 1654.17
Previous Monthly High 1807.93
Previous Monthly Low 1709.68
Daily Fibonacci 38.2% 1672.26
Daily Fibonacci 61.8% 1667.47
Daily Pivot Point S1 1663.72
Daily Pivot Point S2 1651.56
Daily Pivot Point S3 1643.41
Daily Pivot Point R1 1684.03
Daily Pivot Point R2 1692.18
Daily Pivot Point R3 1704.34

 

 

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