- A modest USD pullback assisted gold to find some support near the $1677-76 region.
- The upbeat US economic outlook helped limit the USD downside and capped gains.
- A slight disappointment from the US ADP report did little to provide any impetus.
Gold extended its sideways consolidative price action through the mid-European session and remained confined in a narrow trading band around the $1,680-85 region.
The precious metal managed to find some support near the $1677-76 region, or monthly lows touched on March 8, though struggled to register any meaningful recovery. The US dollar witnessed some profit-taking from multi-month lows, which, in turn, was seen as a key factor that benefitted the dollar-denominated commodity.
However, the upbeat US economic outlook helped limit the USD downside and kept a lid on any strong gains for the XAU/USD. Investors remained hopeful about the prospects for a relatively faster US economic recovery from the pandemic amid the impressive pace of coronavirus vaccinations and US President Joe Biden’s spending plan.
On the economic data front, the ADP report showed that the US private-sector employers added 517K jobs in March as against consensus estimates pointing to a reading of 550K. Nevertheless, this still marked a notable increase from February’s upwardly revised figure of 176K (117K reported initially) and did little to impress the USD bears.
Meanwhile, a softer tone around the US Treasury bond yields was seen as another factor lending some support to the non-yielding yellow metal. That said, the commodity’s inability to gain any meaningful traction suggests that the recent bearish trend might still be far from over and any attempted bounce might be seen as a selling opportunity.
Wednesday’s US economic docket also features the release of Chicago PMI and Pending Home Sales data. This will be followed by Biden’s speech at 20:20GMT, which, along with the US bond yields might influence the USD price dynamics. Apart from this, the broader market risk sentiment might also provide some impetus to the XAU/USD.
Technical levels to watch
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