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  • Gold witnessed some selling on Wednesday and started retreating from the $1,745-46 supply zone.
  • A modest uptick in the US bond yields provided a modest lift to the USD and exerted some pressure.
  • A softer risk tone might help limit the downside for the safe-haven XAU/USD ahead of FOMC minutes.

Gold edged lower during the Asian session and was last seen hovering near the lower end of its intraday trading range, just above the $1,735 level.

The precious metal struggled to capitalize on the previous day’s positive move to two-week tops and started retreating from the $1,745-46 supply zone. The US dollar found some support from a modest uptick in the US Treasury bond yields and for now, seems to have stalled its corrective fall to two-week lows. This, in turn, was seen as a key factor that exerted some pressure on the dollar-denominated commodity.

That said, a generally softer tone around the Asian equity markets could lend some support to the safe-haven XAU/USD. Investors might also refrain from placing aggressive bets, rather prefer to wait on the sidelines ahead of the release of the latest FOMC meeting minutes, due later this Wednesday. This should further help limit any deeper losses for the commodity, at least for the time being, warranting caution for bearish trades.

Investors remained optimistic about the prospects for a relatively faster US economic recovery from the pandemic, thanks to the impressive pace of coronavirus vaccinations. This, along with US President Joe Biden’s infrastructure spending plan of more than $2 trillion, has been fueling speculations about an uptick in US inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period.

Hence, the minutes will be closely scrutinized for clues on whether the conditions to begin tightening were discussed. This should continue to underpin the greenback and prompt some aggressive selling around the non-yielding yellow metal. In the meantime, the metal is likely to hold above the $1,720 pivotal support and remains at the mercy of the US bond yields, the USD price dynamics, and the broader market risk sentiment.

Technical levels to watch