Search ForexCrunch
  • Gold managed to find some support near multi-month lows, around the $1,677-76 region.
  • A modest USD pullback, softer tone around the equity markets benefitted the commodity.
  • The upbeat US economic outlook, an uptick in the US bond yields should cap the upside.

Gold seesawed between tepid gains/minor losses through the early European session and consolidated the overnight slide back closer to YTD lows.

Following the recent strong runup to four-month tops, the US dollar witnessed some profit-taking and was seen as one of the key factors that benefitted the dollar-denominated commodity. Apart from this, a softer tone surrounding the equity markets further extended some support to the safe-haven XAU/USD, though the upbeat US economic outlook kept a lid on any meaningful recovery.

The impressive pace of vaccinations and US President Joe Biden’s spending plan has been fueling expectations about a relatively faster US economic recovery. In fact, Biden announced the opening of the COVID-19 vaccine program for 90% of American adults by April 19 and will outline details about his infrastructure spending plan of around $3 trillion to $4 trillion later this Wednesday.

This, along with a modest pickup in the US Treasury bond yields, should help limit the USD corrective slide and cap gains for the non-yielding yellow metal. This makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD has formed a strong base near the $1,677-76 region and positioning for any meaningful appreciating move in the near-term.

Market participants now look forward to the US economic docket, featuring the release of the ADP report on private-sector employment, Chicago PMI and Pending Home Sales data later during the early North American session. Traders will also take cues from the US fiscal stimulus headlines, the US bond yields and the USD price dynamics to grab some short-term opportunities around the XAU/USD.

Technical levels to watch