- Gold remained depressed for the second consecutive session on Tuesday.
- The downside remains limited ahead of the Fed Chair Powell’s testimony.
- The set-up still supports prospects for a slide back to August monthly lows.
Gold slipped below the $1900 mark during the early European session, albeit lacked any strong follow-through and recovered a bit thereafter.
The precious metal failed to capitalize on the previous day’s late rebound of around $30 from six-week lows and met with some fresh supply on Tuesday amid a stronger US dollar. Investors remain concerns that the second wave of coronavirus infection could lead to fresh lockdown measures and halt the current global economic recovery. This, in turn, continued benefitted the greenback’s status as the global reserve currency and undermined the dollar-denominated commodity.
This coupled with some stability in the US equity futures further dented the precious metal’s safe-haven status. A slight improvement in the global risk sentiment was evident from a goodish rebound in the US Treasury bond yields, which further contributed to the offered tone surrounding the non-yielding yellow metal through the first half of the trading action on Tuesday.
However, expectations that the Fed Chair Jerome Powell will reaffirm to keep interest rates lower for longer during his congressional testimony later this Tuesday. This makes it prudent to wait for some strong follow-through selling before positioning for any further near-term depreciating move. That said, the commodity still seems vulnerable to slide further towards retesting August monthly swing lows support near the $1863 region.
Technical levels to watch
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