XAU / USD retraces from highs around $ 1,790, decline remains supported

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  • Gold struggles to capitalize on its positive intraday move to the $ 1,790 region.
  • A modest rebound in equity markets and US bond yields is putting some pressure.
  • The prevailing selling bias around the USD should help limit gold’s slide.

The oro moves within a relatively narrow range, between $ 1,780-1,790, during the European session on Friday.

A combination of factors has not helped the precious metal capitalize on its initial rally and found new sales around the region of $ 1,790. The bears could now be looking to extend the previous day’s retracement slide from near the round $ 1,800 level, near the two-month highs.

The investors They seem to have taken in the news the day before that the Biden administration wants a tax increase to capital gains for wealthy people to about 40%. This has been evidenced by a positive rally in US stock market futures. This, in turn, has been seen as a key factor that has weighed on the XAU / USD as a safe haven.

Apart of this, a modest rally in US Treasury yields has acted as a headwind for the yellow metal that does not pay. Negative factors, to a greater extent, have been offset by prevailing bearish sentiment around the US dollar, which remains weak near multi-week lows amid lower expectations of an earlier-than-expected Fed monetary policy tightening.

Investors now seem convinced with the view that any spike in inflation is likely to be transitory and that the Fed will keep interest rates near zero for a longer period. This has been seen as a key factor that has offered some price support to dollar-denominated gold and should help limit deeper losses, at least for now.

Market participants are now awaiting the release of the preliminary US manufacturing and services PMI. The data will offer a new perspective on how the economy is performing and influence the USD. This, coupled with US bond yields and broader market risk sentiment, could give the XAU / USD some boost.

Gold technical levels

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