- Sustained USD selling bias assisted gold to gain some intraday positive traction on Tuesday.
- The risk-on environment, surging US bond yields kept a lid on any further gains for the metal.
Gold struggled to capitalize on its intraday positive move and quickly retreated to the lower end of its daily trading range, around the $1820-19 region during the early European session.
The offered tone surrounding the US dollar assisted the dollar-denominated commodity to gain some positive traction through the first half of the trading action on Tuesday. However, a combination of factors kept a lid on any strong gains for the XAU/USD, rather prompted some fresh selling at higher levels.
The prevalent risk-on mood was seen as a key factor that undermined demand for the safe-haven precious metal. The global risk sentiment remained well supported by the optimism over a strong economic recovery amid the progress in coronavirus vaccinations and expectations for a massive US fiscal spending plan.
This, along with surging US Treasury bond yields, further collaborated towards capping the upside for the non-yielding yellow metal. The prospects for the passage of the US President Joe Biden’s $1.9 trillion stimulus package pushed the yield on the benchmark 10-year government bond to the highest level since February 2020.
From a technical perspective, the commodity’s inability to attract any follow-through buying suggests that the near-term bearish bias might still be far from being over. That said, traders might still wait for a sustained weakness below the $1810 region before positioning for any further depreciating move for the XAU/USD.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment and the US bond yields will play a key role in influencing the metal. Apart from this, the USD price dynamics will also be looked upon to grab some short-term trading opportunities around the XAU/USD.
Technical levels to watch
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