- Gold witnessed some follow-through selling for the second consecutive session on Tuesday.
- A positive risk-tone, sustained USD buying, rising US bond yields all contributed to the decline.
- The next target for bearish traders is pegged near the $1677-76 region, or multi-month lows.
Gold added to its intraday losses and slipped below the $1700 mark, or three-week lows during the early European session.
The precious metal continued losing ground for the second consecutive session on Tuesday and was pressured by a combination of factors. A generally positive risk tone, sustained US dollar buying and a fresh leg up in the US Treasury bond yields all contributed to the ongoing decline to the lowest level since March 9.
The USD shot to four-month tops and remained well supported by the upbeat outlook for the US economy. Investors remain optimistic about the prospects for a relatively faster US economic recovery from the pandemic amid the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package.
Meanwhile, the reflation trade pushed the yield on the benchmark 10-year US government bond back closer to the 1.75% threshold, or over one-year tops touched earlier this month. This was seen as another factor that benefitted the USD and further contributed to driving flows away from the non-yielding yellow metal.
From a technical perspective, Tuesday’s follow-through selling reaffirmed the overnight bearish breakthrough a two-week-old trading range and supports prospects for additional losses. Hence, a subsequent slide towards retesting multi-month lows, around the $1677-76 region, now looks a distinct possibility.
Market participants now look forward to the US economic docket, featuring the release of the Conference Board’s Consumer Confidence Index. Apart from this, the US bond yields will influence the USD. Traders might further take cues from the broader market risk sentiment to grab some opportunities around the XAU/USD.
Technical levels to watch