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  • Gold bulls take a breather as US dollar looks to recover ground.
  • Fading optimism over the coronavirus vaccine spurs safe-haven demand.
  • Cautious trading to extend ahead of the FOMC minutes.

Gold prices (XAU/USD) is reversing a dip below the 1750 level, looking to challenge the new two-day high of 1751.38 reached in early Asia.

The yellow metal is trying hard to regain the 1750 mark, underpinned by the tepid market mood. The European traders hit their desks and react to the slide in the US stocks and mixed action on the Asian equities after the optimism over the anti-coronavirus vaccine faded. According to Reuters, a medical news website reported the vaccine was insufficient.

More so, weaker US Housing data, deterioration in the Japanese business morale and a slump in the Australian Retail Sales exacerbated concerns over deepening global economic contraction and boost the haven demand for gold.          

Further, the war of words between the US and China continue to intensify each passing day and thwart the trade relations between the two economies, which eventually benefits the safety bet.

From a broader perspective, the massive monetary and fiscal stimulus deployed globally to fight the unprecedented virus impact will continue to remain the main catalyst for the near-term bullish momentum in the prices.

While the US Federal Reserve (Fed) Chairman J. Powell’s latest testimony also renders positive for the yellow metal. Powell said the Fed is committed to using our full range of tools to support economy in this challenging time.

Over the last hour, XAU bulls are struggling with the recovery, as the US dollar is also rising against its major peers amid increased nervousness ahead of the FOMC April meeting’s minutes due on the cards later on Wednesday.

Gold: Technical levels to watch

Should the upside gains traction, the next resistances are aligned at 1754.39 (Nov 2012 high) and 1760 (round number). To the downside, immediate support is seen at 1728.67 (May 15 low). A break below which the 1700 mark will be tested.

Gold: Additional levels