- Gold gains positive traction on Tuesday and recoups some of the previous day’s losses.
- Reduced expectations for more aggressive Fed rate hikes and recession fears offer some support.
- A modest rally in the dollar acts as a headwind and caps the yellow metal’s gains.
The Prayed it has attracted some buying on Tuesday and has reversed some of the previous day’s sharp decline from the important 200-day SMA. XAU/USD maintains its modest gains at the start of the European session and is trading now just above the $1,825 levelup around 0.20% on the day.
the recent and The sharp drop in commodity prices appears to have eased concerns about persistently rising inflationary pressures.. This, in turn, forced investors to reassess the prospects for more aggressive rate hikes by the Fed, which was reinforced by the recent decline in US Treasury yields. Aside from this, rising recession fears helped non-yielding gold regain some positive traction.
Although inflation expectations have softened, investors remain concerned that rapidly rising interest rates and tightening financial conditions pose a challenge to global economic growth. This was evident in the cautious sentiment prevailing in equity markets, which offered additional support to safe-haven gold amid expectations that some G7 countries plan to ban bullion imports from Russia.
As a way to toughen sanctions on Russia for its invasion of Ukraine, The US, UK, Japan and Canada could announce a ban on new gold imports from Russia during this week’s G7 summit. This was another factor that contributed to the buying tone surrounding gold prices. However, gains remain limited amid a modest rally in the dollar, which tends to weigh on the price of gold, denominated in dollars.
Even from a technical standpoint, the recent repeated failures near a technically significant moving average favor the bears. However, it would be wise to wait for a strong sell-off before positioning for any further short-term bearish moves. Traders now look to the US economic calendar, with the release of the Conference Board Consumer Confidence Index and the Richmond Manufacturing Index, for some momentum later in the American session.
gold technical levels
Source: Fx Street
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