- A broad-based USD strength put some pressure on gold for the second day in a row.
- Risk aversion, a modest pullback in US bond yields, helped limit any further losses.
- The yellow metal had a fairly moderate reaction to the release of the US core PCE price index.
The oro it maintained its offered tone during the early American session and was last seen hovering around the $ 1,763 area, just above the eight-month lows touched earlier this Friday.
The precious metal extended this week’s rejection drop from the 200-day EMA and witnessed some follow-up selling on the last trading day of the week. The drop was exclusively sponsored by a strong tone offered around the US dollar, which tends to push away the flows of dollar-denominated commodities.
The USD added to the previous day’s strong gains led by a sharp rise in US Treasury yields The US bond market has been reacting to prospects for a strong global economic recovery amid progress on COVID-19 vaccines and US President Joe Biden’s proposed $ 1.9 trillion pandemic aid package.
Reflation trading further forced investors to price in a spike in inflation, which was bolstered by macroeconomic data on Friday. The US Bureau of Economic Analysis reported that PCE’s core price index was unchanged at 1.5% annually in January, compared with market expectations of a modest decline to 1.4%.
Meanwhile, the negative factor was, to some extent, offset by a mixed performance in equity markets, which extended some support to the safe haven of the XAU / USD. This, coupled with a modest pullback in US bond yields, helped limit any further losses for the underperforming yellow metal, at least for now.
That said, the short-term bias remains skewed in favor of bearish traders and supports the prospects for further weakness. Therefore, a subsequent break below the intermediate support of $ 1,750, en route to the intermediate support of $ 1,725-24 and $ 1,700, remains a clear possibility.