- Commodity selloff weighs on the precious metal on Tuesday.
- Gold struggles to find demand despite risk aversion.
- Greenback continues to gather strength to drag XAU/USD lower.
The troy ounce of the precious metal is suffering heavy losses on Tuesday pressured by the commodity selloff triggered by plunging crude oil prices. As of writing, the XAU/USD pair, which touched a 12-day low of $1,661, was last seen trading at $1,671, losing $25, or 1.45% on the day.
Risk aversion returns on Tuesday
The collapse in crude oil prices witnessed at the start of the week seems to be forcing investors to look for cash with an aim to cover their losses and meet margin calls. Gold, which gained more than $100 since the start of the month, is, once again, moving in tandem with risk-sensitive assets in the current market environment.
On the other hand, the greenback is capitalizing on risk-off flows to keep the bearish pressure intact. At the moment, the US Dollar Index is up 0.36% on a daily basis at 100.30. US stock index futures are falling sharply on Tuesday to suggest that Wall Street’s main indexes are likely to start the day deep in the negative territory. If flight-to-safety continues to dominate the financial markets in the second half of the day, the USD could continue to find demand.
There won’t be any significant macroeconomic data releases other than Existing Home Sales from the US and investors are likely to stay focused on risk perception.
Technical levels to watch for
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