- Gold found some support ahead of $1900 and stalled its sharp pullback from all-time highs.
- A sharp intraday slide in the US bond yields undermined the USD and extended some support.
Gold had some good two-way price swings on Tuesday and now seems to have stabilized around the $1935-40 region.
Following a sharp Asian session spike to a record high level of $1981, the precious metal witnessed a dramatic intraday turnaround and dived to the $1900 neighbourhood. A modest pickup in the US dollar demand – though lacked any obvious fundamental catalyst – prompted some aggressive long-unwinding trade amid overbought conditions.
However, a sharp intraday turnaround in the US equity markets kept a lid on the attempted USD rebound from two-year lows. This coupled with hope over some sort of agreement on the next round of the US fiscal stimulus and dovish Fed expectations extended some support to the non-yielding yellow metal, rather attracted some dip-buying.
Adding to this, a weaker opening in the US equity markets further underpinned the precious metal's perceived safe-haven status. It will now be interesting to see if the commodity is able to gain any meaningful traction or moves into near-term consolidation phase ahead of a two-day FOMC meeting that gets underway this Tuesday.
In the meantime, traders are likely to take some cues from the US economic docket – featuring the release of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index. The data might influence the USD price dynamics, which along with the broader market risk sentiment might produce some meaningful trading opportunities.
Technical levels to watch
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