- Risk appetite and recovery in US bond yields triggers new selling around gold on Tuesday.
- A softer tone around the USD offers some support and helps limit deeper losses.
The oro remains lower during the European session on Tuesday, trading near the lower end of its daily range around the $ 1,850 region.
The precious metal has seen some selling on Tuesday and has retraced further from the $ 1,875-76 resistance zone played the day before. The fall it is due exclusively to the optimistic sentiment prevailing in the market, which tends to weigh on the demand for traditional safe-haven assets, such as gold.
Global risk sentiment has gained strong momentum amid renewed optimism about massive fiscal stimulus in the United States and hopes for a global economic recovery more solid. Democratic lawmakers introduced the $ 1.9 trillion budget measure Monday, a step to bypass Republicans and get the legislation passed in the United States Congress.
Meanwhile, risk money flows, together with Expectations of higher government borrowing have triggered a new boost in US Treasury yields. This has been seen as another factor that puts pressure on the yellow metal. However, new selling around the US dollar has provided some support to gold prices, denominated in dollars.
From a technical perspective, the XAU / USD, so far, has managed to defend the support of a short-term bullish trend line. The aforementioned trend line extends from the monthly lows in January, around the $ 1,800 level. Should it break down decisively it will set the stage for a further short-term bearish move for gold.
There is no major economic data release on Tuesday. Therefore, broader market risk sentiment will play a key role in influencing the XAU / USD safe haven. Apart from this, investors’ attention will also focus on US bond yields and USD price dynamics to seize some short-term opportunities.
Technical levels of gold
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