- Gold extended its price action within the range throughout the early hours of the American session.
- A good recovery in US bond yields benefited the USD and limited the early rally.
- COVID-19 nerves extended some support for safe haven metal ahead of the FOMC.
The oro it updated daily lows heading into the North American session, although it quickly recovered somewhat thereafter. Currently hovering around the $ 1,800 level, the XAU / USD struggled to capitalize on its modest intraday gains to $ 1,807 and was constrained by a combination of factors. The US dollar picked up demand amid a good rally in US Treasury yields, which in turn acted as a headwind for the underperforming yellow metal.
The USD rally could further be attributed to some trade repositioning ahead of the FOMC’s highly anticipated monetary policy decision, to be announced later during the US session. Market participants will be looking for clues as to when to downsize. amid rising inflation in the US This will play a key role in influencing the short-term trajectory of the dollar and provided a new directional boost to the dollar-denominated commodity.
Meanwhile, investors remain concerned about the potential economic consequences of the spread of the highly contagious Delta variant of the coronavirus. This, to a greater extent, helped offset the negative factors and helped limit any significant decline in traditional gold as a safe haven. Investors also seem to be turning their full attention to the FOMC key event, which warranted some caution before placing aggressive directional bets.
Even from a technical perspective, the XAU / USD has been swinging in a familiar trading range for the last week or so. The slide remains muffled near the horizontal support at $ 1,790, which should now act as a fundamental point for short-term traders. Given the recent failure near the very important 200-day SMA, a convincing break below could trigger some technical selling and pave the way for some short-term depreciation move.
On the upside, the $ 1,808-10 zone now appears to have emerged as strong immediate resistance. Sustained strength beyond is likely to push spot prices closer to the 200-day SMA, currently around the $ 1,822-23 region. Some follow-up buying will be seen as a new trigger for bull traders and will pave the way for a move towards monthly swing highs, around the $ 1,834 area, en route to the next relevant hurdle near the $ 1,850-52 zone.
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