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  • Gold edged lower on Wednesday and eroded a part of the overnight gains to two-week tops.
  • The underlying bullish sentiment prompted some technical selling near the $1,745-46 hurdle.
  • Sliding US bond yields undermined the USD and helped limit losses ahead of FOMC minutes.

Gold maintained its offered tone through the first half of the European session and was last seen hovering near the lower boundary of its daily trading range, just above the $1,735 level.

The precious metal witnessed some selling on Wednesday and for now, seems to have stalled its recent bounce from multi-month lows near the $1,745-46 supply zone set in March. The underlying bullish tone in the financial markets was seen as a key factor exerting some pressure on the safe-haven XAU/USD.

The global risk sentiment remained well supported by expectations for a strong global economic recovery from the pandemic. The International Monetary Fund (IMF) reinforced the optimistic outlook and upgraded its global growth forecast for 2021, anticipating the strongest expansion in at least four decades.

That said, a combination of factors helped limit any deeper losses, at least for the time being. The US Treasury bond yields extended their recent sharp pullback from over one year tops and dragged the US dollar to two-week lows. This, in turn, extended some support to the dollar-denominated commodity.

Investors also seemed reluctant to place aggressive bets and preferred to wait on the sidelines ahead of Wednesday’s release of the FOMC meeting minutes. Given the market expectations for an earlier than anticipated Fed rate hike, any discussion on the conditions to begin tapering could weigh on the non-yielding yellow metal.

In the meantime, the XAU/USD is more likely to continue with its subdued/range-bound trading action amid absent relevant market moving economic releases from the US. However, some repositioning trade heading into the key event risk might infuse a bit of volatility and allow traders to grab short-term opportunities.

Technical levels to watch