- A combination of factors prompted some fresh selling around gold on Tuesday.
- The risk-on mood, surging US bond yields both contributed to the intraday slide.
- Weaker USD might extend support and help limit the downside for the commodity.
Gold dived to one-and-half-week lows during the early North American session, with bears now awaiting a sustained break below the $1800 round-figure mark.
The precious metal struggled to capitalize on its intraday positive move, instead met with some fresh supply near the $1826-27 region and now seems vulnerable to slide further. The prevalent risk-on environment – as depicted by an extension of the recent bullish run in the equity markets – kept a lid on the early uptick for the safe-haven XAU/USD.
The global risk sentiment remained well supported by the progress in vaccinations for the highly contagious coronavirus disease. This, along with expectations for a massive US fiscal spending plan, has been fueling hopes for a strong global economic recovery. This, in turn, boosted investors’ confidence and weighed on traditional safe-haven assets.
Meanwhile, the increasing likelihood for the passage of the US President Joe Biden’s proposed $1.9 trillion COVID-19 stimulus package triggered a fresh leg up in the US Treasury bond yields. In fact, the
the yield on the benchmark 10-year government bond to the highest level since February 2020, around 1.26%, and further drove flows away from the non-yielding yellow metal.
That said, the heavily offered tone surrounding the US dollar extended some support to the dollar-denominated commodity and might help limit any further losses, at least for the time being. This makes it prudent to wait for a sustained break below the $1800 mark before positioning for any further depreciating move amid absent relevant market-moving economic data.
Technical levels to watch
Share
