- Gold is trading in a tight range below the 200-day SMA for the second day in a row.
- Risk appetite, rising US bond yields and expectations of a hawkish Fed rate hike are putting pressure.
- The modest weakness of the dollar offers some support to the yellow metal and justifies the caution of the bears.
The Prayed continues its fight to gain any significant traction on Tuesday and remains confined to a tight range for the second day in a row. XAUUSD oscillates between tepid gains and small losses during the first part of the European session and now trading in neutral territory, around the $1,835 zone, just below the important 200-day SMA.
The risk appetite, represented by a positive tone in global stock markets, proved to be a key factor acting as a headwind for safe-haven gold. Also, rising US Treasury yields helped limit gains in the yellow metal, which does not offer returns. The markets seem convinced that the US central bank. will maintain its aggressive tightening policy to combat persistent inflation. This, in turn, helped US bond yields stem the post-FOMC pullback from decade highs.
However, the US dollar struggled to attract buyers and came under pressure from signs that there will be no consensus for a rate hike of 100 basis points In the near future. Federal Reserve Governor Christopher Waller declared on Sunday that he was “fully willing” to reduce inflation and was open to another 75 basis point rate hike in July, though he ruled out the more extreme scenario of a 100 basis point hike. basic points. This was the only factor that offered some support to dollar-denominated gold and helped limit the decline, at least for the time being.
The mixed fundamental backdrop could deter investors from making aggressive directional bets ahead of the Fed Chairman’s testimony, Jerome Powell, Wednesday and Thursday. Meanwhile, traders will look to US Existing Home Sales data due out on Tuesday. This, along with US bond yields, will influence the price dynamics of the dollar. Aside from this, investors will take cues from the broader market risk sentiment to take advantage of some short-term opportunities around gold.
Source: Fx Street
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