- A sudden spike in US bond yields triggered new gold sales in the last hour.
- The prevailing cautious mood could help limit deeper losses for the safe haven product.
- Investors can also refrain from aggressive bets prior to the FOMC’s policy decision.
The oro witnessed some selling during the session updated the European and updated daily lows, around the $ 1,728 region in the last hour, with the bears now challenging the 100 hourly SMA support.
The precious metal has been struggling to capitalize on the recent rebound from multi-month lows and once again faced rejection near the $ 1,740-42 supply zone. Prospects for a relatively faster US economic recovery from the pandemic continued to prop up the US dollar. This, in turn, was seen as a key factor limiting earnings from the dollar-denominated commodity.
Meanwhile, the latest leg of a sharp decline could be attributed to a sudden spike in US Treasury yields, which tends to push away the inflows of the underperforming yellow metal. In fact, the benchmark 10-year US government bond yield soared to highs in more than a year, past 1.65% amid doubts the Fed would sell ultra-low interest rates for a longer period.
The sell-off in the US bond market could extend some support to the XAU / USD safe haven. Aside from this, a bit of trade repositioning ahead of Wednesday’s key risk event, the FOMC policy decision, could help limit deeper losses. This makes it more prudent to wait for some subsequent selling before positioning yourself for any other short-term depreciation moves.
From a technical perspective, any subsequent decline is likely to find decent support in the $ 1,720-19 region, marking a short-term rising trend line extending from monthly lows. A convincing break below will be seen as a new trigger for bearish traders and will set the stage for a pullback towards the $ 1,700 level.
Technical levels
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