- Gold witnessed a modest recovery from the multi-month lows hit earlier this Tuesday.
- Sustained buying interest in the USD kept any significant upside potential for the commodity limited.
- The lack of strong follow-up purchases supports the prospects for further weakness.
The oro struggled to capitalize on its good intraday rebound from multi-month lows and was last seen trading modest gains of around 0.20%, just below the $ 1,730 level.
The precious metal managed to find some support near the $ 1,707 area and experienced a modest rebound from the lowest level since mid-June 2020. As the recent violent wave in the US bond market has eased , mild oversold conditions on short-term charts. It seemed to be the only factor that caused a short coverage around the non-yielding yellow metal.
This, coupled with a captivating mood in the equity markets, extended some additional support to the XAU / USD safe haven. Supporting factors were, to a greater extent, offset by some subsequent purchases in US dollars, which tend to undermine demand for dollar-denominated commodities and keep any significant gains for XAU / USD limited.
The dollar remained well supported by the optimistic US economic outlook, bolstered by the impressive rate of vaccination against COVID-19 and the progress of a massive US fiscal spending plan. fueling doubts that the Fed will maintain ultra-low rates for a longer period, which was seen as another factor limiting gold gains.
From a technical perspective, the metal’s inability to gain significant traction suggests that the short-term downtrend could still be far from over. This makes it prudent to wait for some solid follow-up buying before confirming that the XAU / USD has bottomed out in the near term and positioned for a further recovery.
There is no major market-moving economic data released in the US on Tuesday. Therefore, US bond yields, USD price dynamics, and overall market risk sentiment will play a key role in influencing the XAU / USD.
Technical levels
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