- XAU bears fight back control amid renewed USD demand.
- Dollar firms up on hopes of an optimistic Fed, US-China tensions.
- All eyes on the risk trends and FOMC for the next direction.
Gold (XAU/USD) is slightly off the daily low of 1694 but remains under the 1700 mark, having faded an early spike to 1704.86, fresh two-day highs.
The choppy trading seen in the yellow metal is mainly driven by the US dollar price-action, with a cautious market tone reviving the haven demand for the buck and eventually downing the USD-sensitive gold. Souring US-China and Australia-China relations continue to unnerve investors.
Further, the greenback drew bids across its main competitors amid expectations that the US Federal Reserve (Fed) may deliver an optimistic tone on the economy when its meets later on Tuesday, with the monetary policy decision out on Wednesday.
This comes in light of the recent excellent US NFP data that boosted expectations for a V-shaped US economic recovery from the coronavirus pandemic led contraction.
The focus remains on the FOMC policy meeting for fresh cues on the economic outlook and the next direction in the prices. In the meantime, the sentiment on the global equities and USD dynamics will continue to have a significant impact on the metal.
Gold: Technical levels to watch
With the renewed weakness, immediate support is seen at 1690 (round figure). A break below which the 1677.73 (Monday’s low) will be tested. Alternatively, the next resistances are aligned at 1706 (100-HMA) and 1716.69 (Friday’s high).
Gold: Additional levels
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