Gold’s (XAU/USD) recovery moves have stalled at $1,810, up 0.20 percent intraday, as the European day begins on Tuesday. The market remains cautiously hopeful, supporting gold purchasers. The recent rise in the US dollar, on the other hand, appears to be putting the precious metal’s upward momentum to the test.
The US dollar index (DXY), on the other hand, recovers early Asian losses while picking up bids to 92.22, maintaining the previous day’s recovery advances from a one-week low.
While concerns over the coronavirus (COVID-19) and reflation fears drive the DXY higher, dragging on gold prices, traders are wary ahead of the US Consumer Price Index (CPI) for June. However, the US CPI ex Food & Energy is predicted to rise to 4.0 percent, signaling reflation fears and boosting concerns about the Fed’s tapering as well as a rate hike.
“The US economy has not accomplished the’substantial additional progress’ set by the US Federal Reserve to begin reducing asset purchases,” New York Federal Reserve President John Williams said earlier in Asia, according to Reuters. His remarks bolster expectations for more loose money and favorable equities.
It’s worth remembering that US lawmakers are debating budget ideas that include President Joe Biden’s $4.0 trillion in aid programs, as well as ways to filter market movements.
Stock futures remain directionless at record highs amid these moves, while the US 10-year Treasury yield climbs for the third day in a row, up 1.1 basis points (bps) to 1.37 percent by press time.
Aside from the gloomy headlines and the US CPI, gold dealers are keeping a close eye on Fed Chair Powell’s testimony, which is set to be released on Tuesday.
As a result, even as bulls manage to defend the $1,800 level, various filters put the gold purchasers to the test.
Despite strong Momentum, gold stays capped inside a weekly rectangle. To hold the reins, the bulls need a clean upside break of the $1,811-15 resistance region, which includes the 200-EMA and a 38.2 percent Fibonacci retracement of June’s drop.
The monthly peak around $1,818 works as an additional upside filter, while the $,1830 and 61.8 percent Fibonacci retracement line near $1,853 could push gold buyers over $1,815
Meanwhile, the $1,800 level and 23.6 percent Fibonacci retracement at $1,789, which also serves as rectangle support, may put short-term sellers to the test.
If gold sellers maintain their grip below $1,789, the June 18 low near $1,760 and the previous month’s low near $1,750 will be the focus.
Overall, gold prices are rising, but bulls are waiting for new signs to tighten their hold.
Bullish trend/n
