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Gold prices are under pressure on Tuesday following US data and the upcoming Federal Reserve’s decision. The yellow metal broke below the $1780 support and tumbled to $1766, reaching the lowest level since December 3.
From the bottom, XAU/USD rebounded to as highs at $1777 and as of writing it is moving toward $1770, still facing a negative momentum. The decline started after the release of US PPI numbers that sent US yields higher.
The US 10-year rose from 1.44% to 1.47% and the 30-year to 1.86% from 1.82%. The move in the bond market weakened gold. At the same time, the dollar gained momentum but posted limited gains. The USD still remains in negative ground for the day against most of its main rivals, although trading in the recent range.
Gold price has remained better within sideways consolidation. So far, December has not given traders much in the way of volatility in the gold price that has been accumulated between $1,762 and $1,808 without a direction either way.
Today’s slide is considered as one of the largest seen so far for the month and with the US inflation report and the Federal Reserve Bank around the corner, there are risks of a surge in the US dollar.
This comes at a time where the USD may well be favoured as one of the more reliable safe-havens as the COVID variant continues to spread around the world, leaving a dull tone in financial markets.
From a technical perspective, the gold price could be on the verge of breaking the daily support. However, failures to do so could lead to an upside breakout as follows:
Traders await the outcome of the FOMC meeting. On Wednesday the central bank will announce its decision on monetary policy. The central bank is expected to announce a faster reduction of its bond-buying program.
From a technical perspective, the XAU/USD Index is still under pressure. A recovery above $1780 would alleviate the pressure. The next support stands at $1760 followed by $1745. On a wider perspective, $1795 is the critical resistance; a daily close clearly above should open the doors to a recovery above $1800 and more.
