- Gold is witnessing some selling on Wednesday and is starting to pull back from the $ 1,745-46 resistance zone.
- A modest rally in US bond yields provides a modest rise to the USD and puts some pressure on gold prices.
- A softer risk tone could help limit the decline in the XAU / USD as a safe haven ahead of the FOMC minutes.
The oro moves lower during the European session on Wednesday and remains near the lower end of its intraday trading range, just above the $ 1,735 level.
The precious metal has struggled to capitalize on the positive move the day before to two-week highs and has started to retreat from the resistance zone of $ 1,745-46. The US dollar has found some support in a modest rally in US Treasury yields and, for now, it appears to have halted its corrective slide to two-week lows. This, in turn, has been seen as a key factor that has put some pressure on gold prices, denominated in dollars.
Having said that, a softer tone in equity markets could offer some support to the safe-haven XAU / USD. Investors could also refrain from opening aggressive positions and prefer to wait on the sidelines before the release of the minutes of the last FOMC meeting, which will be published later this Wednesday. This should help limit deeper losses for gold, at least for now, which warrants caution for bears.
Investors have remained optimistic about the prospects for a relatively faster US economic recovery from the pandemic, thanks to the impressive rate of vaccination against the coronavirus. This, coupled with US President Joe Biden’s infrastructure spending plan of more than $ 2 trillion, has fueled speculation about a spike in US inflation and raised doubts that the Fed will keep interest rates ultra-low for a long time. longer period.
Therefore, the minutes will be closely scrutinized for clues as to whether the conditions to begin tightening its monetary policy were discussed. This should continue to prop up the USD and lead to a hard sell around the unperforming yellow metal. Meanwhile, the yellow metal is likely to remain above the fundamental support at $ 1,720 and remains at the mercy of US bond yields, USD price dynamics and overall market risk sentiment.
Gold technical levels