Search ForexCrunch
  • Gold reversed an early dip to weekly lows and was supported by a combination of factors.
  • The USD witnessed profit-taking amid sliding US bond yields and extended some support.
  • A goodish rebound in the US equity futures kept a lid on any further gains for the commodity.

Gold held on to its modest intraday gains through the mid-European session, albeit lacked any follow-through buying. The commodity was last seen trading near the $1730 region, up 0.20% for the day.

Following an early dip to weekly lows, the precious metal managed to regain some positive traction and recovered a part of the previous day’s losses. The early uptick was supported by the ongoing decline in the US Treasury bond yields, which tends to benefit the non-yielding yellow metal.

In fact, the yield on the benchmark 10-year US government bond momentarily slipped below 1.6% on Wednesday amid easing inflation worries. The Fed Chair Jerome Powell on Tuesday painted an optimistic picture of the economy and downplayed the risks that growth would spur unwanted inflation.

Meanwhile, retreating US bond yields prompted some profit-taking around the US dollar, which was seen as another factor that underpinned the dollar-denominated commodity. However, a positive turnaround in the equity markets kept a lid on any meaningful upside for the safe-haven XAU/USD.

Looking at the technical picture, the commodity has repeatedly struggled to capitalize on its move beyond the $1740-42 supply zone. Apart from this, the overnight break below a two-week-old ascending trend-line support might have already set the stage for further near-term weakness.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders and flash PMI prints for March. Apart from this, Fed Chair Jerome Powell’s second testimony before the US Congress might provide some trading impetus to the XAU/USD.

Technical levels to watch