- Gold witnessed a modest short-hedging rebound amid mild oversold conditions.
- A rally in US bond yields, sustained USD buying limited any further gains.
- Investors are looking forward to Powell’s speech for significant business momentum.
The oro it updated the daily highs, around $ 1,723 during the early days of the American session, although it declined rapidly thereafter. Gold was last seen hovering around the $ 1,715-16 region, up around 0.10% on the day.
The precious metal managed to gain some positive traction on Thursday and pulled away from the nine-month lows of around $ 1,700 touched in the previous session. The rally lacked an obvious fundamental catalyst and could only be attributed to some short hedging amid oversold conditions.
Following the steep decline since the beginning of this year, investors chose to lighten their bearish positions ahead of Fed Chairman Jerome Powell’s scheduled speech. That said, a combination of factors kept any wild rally in check for the XAU / USD, at least for the moment.
Expectations of a relatively faster US economic recovery continued to support the US dollar, which, in turn, limited gains on the dollar-denominated commodity. The optimistic US economic outlook was supported by progress on COVID-19 vaccines and a massive US fiscal spending plan.
Reflation trading has fueled speculation about a spike in inflation and raised doubts that the Fed will keep interest rates ultra-low. This was evident by a rally in US Treasury yields, which prevented the bulls from placing bets on the non-performing yellow metal.
Aside from this, a strong intraday rebound in equity markets further undermined the safe haven of XAU / USD. On the economic data front, US Initial Weekly Unemployment Claims rose to 745,000 in the last week, down from the 750,000 expected, though they did little to provide a significant boost.
Meanwhile, the slide remains muffled as investors await comments from Powell on the risk of a rapid rise in long-term borrowing costs. This makes it prudent to wait for a strong follow-up buy or a sustained break below the $ 1,700 round mark before placing new directional bets.
Technical levels
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