- Gold attracted some buying for the second day in a row on Wednesday.
- As US bond yields receded, the weaker USD acted as a tailwind for commodities.
- Aggressive central bank expectations could continue to limit the metal’s gains.
The oro (XAU / USD) It continued to show some resistance below the confluence of the 100/200 day SMA and attracted some buying below the $ 1,780 level for the second day in a row. The intraday rally pushed the pair towards $ 1,796, or new daily highs during the early days of the American session, although it had no follow-up. The US dollar met with fresh offers on Wednesday, reversing upbeat gains inspired by the previous day’s US macroeconomic data to highs of more than a week. This, in turn, was seen as a key factor that acted as a tailwind for dollar-denominated commodities, including gold.
Apart from this, a softer tone in equity markets extended additional support to the safe haven precious metal. The bulls were also inspired by an extension of the recent pullback in longer-term US Treasury yields, which tends to benefit underperforming gold. In fact, the yield on the 10-year US government bond declined for the fourth consecutive session and fell below 1.60%. By contrast, short-term US government bond yields rose to the highest level since March 2020 amid mounting bets for an early policy tightening by the Fed.
technical perspective
From a technical perspective, the emergence of new purchases at lower levels favors bullish traders. The positive outlook is reinforced by the fact that the technical indicators on the daily chart remain in bullish territory. That said, the recent pullback from an intermediate hurdle near the $ 1,812-14 zone warrants some caution. This makes it prudent to wait for a strong follow-up buy beyond the aforementioned barrier before positioning for more profit. Gold could further accelerate momentum to challenge the $ 1,832-34 high supply zone.
On the other hand, the $ 1,783-82 zone now appears to have emerged as strong immediate support. A convincing break below could spark some technical selling and drag the XAU / USD towards the next relevant support near the monthly en-route lows of the $ 1,765-64 zone, around the $ 1,745 zone. Failure to defend the aforementioned support levels will change the bias in favor of bearish traders and make gold vulnerable to test the $ 1,722-21 support before finally dropping to the $ 1,700 level.
Technical levels
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