- A softer tone around the USD helps gold regain positive traction on Thursday.
- Risk appetite and a rebound in US bond yields could limit any significant gains.
- A sustained move above the $ 1,745-46 hurdle is needed to confirm a bullish bias.
The oro has reached new intraday highs during Thursday’s European session, with the bulls making a fresh attempt to outperform a strong barrier near the $ 1,745-46 region.
Following the modest pullback the day before, the precious metal managed to regain some positive traction on Thursday. The US dollar has struggled to capitalize on the modest rebound of the previous day from lows of more than two weeks and has moved lower during the first half of trading action on Thursday. This, in turn, has been considered a key factor that has provided a modest boost to gold prices, denominated in dollars.
That said, a combination of factors has limited the strong continuation gains for the XAU / USD, at least for now. Underlying bullish sentiment in financial markets could prevent bulls from opening aggressive positions on the precious metal safe haven. This, coupled with a modest rally in US Treasury yields, could limit the rise of the yellow metal.
Minutes from the last FOMC meeting held March 16-17 revealed that policymakers remained cautious about the continuing risks stemming from the pandemic. The Fed reiterated its commitment to extend support for monetary policy until the recovery is more secure. Investors, however, appear to be convinced that a stronger economic recovery would force the Fed to raise interest rates earlier than expected.
The optimistic prospects for a relatively faster US economic recovery from the pandemic has been supported by the impressive rate of vaccination against coronavirus. This, coupled with US President Joe Biden’s infrastructure spending plan, has been fueling speculation about a spike in US inflation. This has raised even more doubts that the Fed will keep interest rates ultra-low for a longer period.
This, in turn, has driven bond yields higher, which together with the optimistic US economic outlook should help limit any significant corrective decline in the USD. Even from a technical perspective, the inability of the XAU / USDD to break through the $ 1,745-46 resistance zone makes it prudent to wait for some solid continuation buying before positioning for an extension of the recent bounce from the multi-month lows.
Gold technical levels