XAU / USD retreats from two-week highs, weakening toward the $ 1,780 zone

• Gold saw some selling on Tuesday and slashed a portion of overnight gains to two-week highs.
• Resurgence in USD demand, a modest recovery in US bond yields put some pressure on gold.

The oro it maintained its offered tone during the first half of the European session and was last seen hovering near the lower end of its daily trading range, just above $ 1,780.

The precious metal continued its struggle to regain the $ 1,800 level and witnessed some new selling on Tuesday, retracing some of the strong positive move the day before to highs of more than a week. The pullback was sponsored by the resurgence in demand for US dollars, which tends to take a toll on demand for the dollar-denominated commodity.

The USD managed to regain traction amid the optimistic outlook for the US economy This was reaffirmed by optimistic comments from Fed Chairman Jerome Powell on Monday, saying that the US economy is gradually recovering from the crisis. of COVID-19.

The US dollar was bolstered by a modest rally in US Treasury yields, which was seen as another factor that pushed out flows of the non-performing yellow metal. Apart from this, the underlying bullish sentiment in financial markets also did little to support the safe haven of the XAU / USD.

Meanwhile, the repeated failures to break above $ 1,800 warrant some caution for bull traders and make it prudent to wait for some follow-up buying before positioning for any appreciation moves. That said, the drop is likely to remain muffled ahead of Friday’s closely monitored monthly jobs report (NFP) release.

Meanwhile, traders could follow the signals from the US economic agenda on Tuesday, which includes the release of Trade Balance and Factory Orders data. This, along with US bond yields, could influence USD price dynamics. Apart from this, the broader market risk sentiment could also generate some trading opportunities around the XAU / USD.

Technical levels