- Gold pulls back from a one-month high hit on Tuesday amid a modest rally in the dollar.
- Safe haven demand revival offers XAUUSD support and helps limit the decline.
- Expectations for a less aggressive Fed rate hike support the prospects for buying at lower levels.
The price of Prayed down slightly on Wednesday and reversing part of the previous day’s rally to a more than one-month high. XAUUSD remains on the defensive at the start of the European session, but manages to hold on above the $1,700 level.
US dollar attracts some buying and it is moving away from its lowest level since September 20 touched the previous day, which in turn is considered a key factor weighing on the price of gold, denominated in dollars. Despite the rising expectations in favor of a less aggressive tightening of the Fed’s monetary policy, markets continue to price in the possibility of a 50 basis point rate hike in December. This continues to support elevated US Treasury yields and offers some dollar support.
Having said that, the caution of the markets gives some support to gold, which is a safe haven, and could limit losses, at least for now. Investors are wary of rising concern about a further global economic recession and uncertainty about the results of the mid-term elections In addition, traders prefer to stay on the sidelines ahead of the release of US CPI consumer inflation numbers due to be released on Thursday. This, in turn, warrants some caution on the part of the bears.
From the technical point of view, the previous day’s sustained break through the hurdle of a multi-month downtrend line, around the $1,680-$1,682 zone, marked a further breakout to the upside. This, in turn, supports the prospects for some buying at lower levels around gold. In the absence of any relevant US economic data releases, traders will follow speeches by New York Fed President John Williams and Richmond Fed President Thomas Barkin on Wednesday. Also, US bond yields will weigh on the dollar and give XAUUSD some momentum.
gold technical levels
Source: Fx Street
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