Gold Price Analysis: XAU/USD struggles for direction, stuck in a range around $1,770 level

• Gold was seen oscillating in a narrow trading band through the Asian session on Tuesday.
• COVID-19 jitters, sustained USD selling continued lending some support to the commodity.
• The risk-on mood, uptick in the US bond yields helped limit any deeper losses for the metal.

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses, around the $1,770 level through the Asian session on Tuesday.

A combination of diverging forces failed to provide any meaningful impetus to the XAU/USD and led to subdued/range-bound price moves through the first half of the trading action. The underlying bullish sentiment in the financial markets was seen as a key factor that undermined the safe-haven precious metal. This, along with a modest uptick in the US Treasury bond yields, capped the upside for the non-yielding yellow metal.

That said, renewed fears about another dangerous wave of coronavirus infections globally and sustained US dollar selling bias extended some support to the dollar-denominated commodity. This, in turn, warrants some caution before positioning for an extension of the overnight pullback from the $1,790 region, or near two-month tops.

The USD languished near multi-week lows amid speculations that the Fed will keep interest rates near zero levels for a longer period. Investors now seem aligned with the Fed’s view that any spike in inflation is likely to be transitory and have been scaling back their expectations for an earlier than anticipated lift-off.

There isn’t any major market-moving economic data due for release from the US on Tuesday. That said, rebounding US bond yields could lend some support to the USD and exert some downward pressure on the XAU/USD. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities.

Technical levels to watch