XAU / USD Falls to $ 1,735-30 Region As US Bond Yields Hit New Cyclical Highs

• Gold is unable to retain its initial gains and fails before strong horizontal resistance at $ 1,760.
• High yields on US bonds caused a short hedge around the dollar and put some pressure on the precious metal.
• A pullback in the stock markets helps limit any further losses in safe-haven gold.

The oro has seen some selling at the start of the European session on Thursday and has fallen to new daily lows around the region of $ 1,735-30 in the last hour.

The precious metal has struggled to capitalize on its initial positive move towards the monthly highs and It has once again started to retreat from near the support turned resistance at $ 1,760. The initial rally was solely due to the post-FOMC selling around the US dollar, which tends to benefit dollar-denominated commodity prices. On Wednesday, the Fed downplayed market expectations and indicated it was in no rush to raise interest rates until at least 2023.

However, the Fed improved its economic projections and predicted a V-shaped recovery in the US. The central bank now sees the economy growing 6.5% this year compared to the 4.3% increase estimated in December. Additionally, inflation is expected to exceed the Fed’s 2% target and rise 2.4% this year. This, in turn, propelled long-term US government bond yields to new cyclical highs, triggering some short hedging in the USD and hitting the yellow metal.

In the meantime, new massive sales in the US fixed income market. it has raised fears about other asset classes. This has been evident in a pullback in US stock market futures, which has offered some support to the safe haven XAU / USD and helped limit further losses, at least for now.

That said, the emergence of some new sales just below a key point suggests that the recent rebound from multi-month lows may have lost steam. A subsequent drop below $ 1,730 will reaffirm the negative outlook and make gold vulnerable.

Gold technical levels