• The USD up-move loses momentum and helps recover early lost ground.
• Weaker bond yields provide an additional boost and remain supportive.
Gold recovered early lost ground to a session low level of $1218 and has now turned higher for the day, recovering part of the overnight downfall.
The US Dollar struggled to build on the previous session's positive momentum/early gains and was seen as one of the key factors behind the latest leg of up-move since the early European session. It is worth noting that a weaker greenback tends to underpin demand for dollar-denominated commodities - like gold.
This coupled with retracing US Treasury bond yields, with the benchmark 10-year yield correcting from five-week tops set on Monday, provided an additional boost to the non-yielding yellow metal and remained supportive of the uptick.
Meanwhile, the prevalent risk-on mood, as depicted by strong rally across European equity markets and which tends to weigh on the precious metal's safe-haven demand, did little to prompt any fresh selling, albeit might now contribute towards capping any strong up-move.
In absence of any major market moving economic releases from the US, the USD price dynamics might continue to act as an exclusive driver of the commodity's momentum on Tuesday. However, this week's important US macro data, especially the first Q2 GDP growth figures, will play an important role in determining the next leg of the directional move.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near $1231 level, above which a fresh bout of short-covering could lift the metal further towards $1240 supply zone. On the flip side, the $1218-16 region now seems to have emerged as an immediate support, which if broken might turn the commodity vulnerable to slide back towards one-year lows, around the $1212-11 area.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.