- Gold struggles to capitalize on the initial rally amid renewed buying interest in the USD.
- The USD maintains its gains after the release of US consumer inflation figures.
- Cautious sentiment in equity markets helps limit losses to the safe-haven precious metal.
He oro is struggling to find a firm direction and remains trapped within a narrow range, around the $ 1,855-60 region, at the start of the American session on Wednesday.
A combination of divergent factors has not helped gold prices extend the positive movement of the previous day and has led to moderate and limited price action within a range, below the 50-day SMA. The initial rally once again paused near the $ 1,862-63 region, ahead of the 50-day SMA hurdle, although the pullback has lacked a strong continuation sell.
The US dollar has regained positive traction amid a modest rebound in US Treasury yields, which in turn has been seen as one of the key factors driving limit earnings from gold, denominated in dollars. In fact, the yield on the 10-year US government bond has halted its decline from a 10-month high on Tuesday and has helped reignite demand for the USD.
Meanwhile, the dollar has had a fairly moderate reaction and has moved shortly after the release of the latest consumer inflation figures. The headline CPI has been in line with estimates and showed a 0.4% month-on-month increase in December. The annual rate rose 1.4% from the 1.3% forecast, although it has done little to impress the USD bulls.
Having said that, Slightly cautious sentiment in US equities has extended some support to the safe-haven XAU / USD and helped limit any deeper losses, At least for the moment. This makes it prudent to wait for a sustained move in either direction before positioning yourself for significant opportunities.
Technical levels of gold