- A drop in US bond yields weighs on the USD and helps gold regain positive traction on Tuesday.
- Expectations of an aggressive Fed rate hike and risk appetite prevented the yellow metal from gaining ground.
- Market attention will continue to be focused on the release of Wednesday’s US consumer inflation figures.
The gold price (XAU/USD) has gained some positive traction on Tuesday and has recovered some of the previous day’s decline near the $1,850 level, or a nearly three-month low hit last week. XAU/USD moves higher during the European session and is trading just below the daily high, around the $1,862 region.
A softer tone around US Treasury yields. kept dollar bulls on the defensive, which in turn was seen as a key factor offering some support to the dollar-denominated yellow metal. Apart of this, concerns about weakening global growth and the possibility of a recession they further propped up gold as a safe haven.
However, a combination of factors prevented the bulls from opening aggressive positions and prevented the price of gold from rising further. The good recovery in US equity futures, coupled with the prospect of a more aggressive tightening of Federal Reserve policy, prevented investors from opening bullish positions on gold.which offers no performance.
In fact, the markets seem to be convinced that the Federal Reserve will have to take more drastic measures to fight inflation persistently high and have been eyeing further rate hikes of 200 basis points for the rest of 2022. Therefore, attention will continue to be focused on the latest US CPI consumer inflation figures for April, to be released on Wednesday.
Meanwhile, expectations of a rapid rise in US interest rates should act as a tailwind for the dollar and limit gold prices. In the absence of any major economic releases, dollar price dynamics and general market risk sentiment will be taken into account to take advantage of some short-term opportunities around XAU/USD.
gold technical levels
Source: Fx Street
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