The reason behind metal’s inability to regain ground is the upbeat market mood
Gold prices turned marginally positive on Tuesday following three days of losses. The precious metal bounced from Friday’s lows seen around $1,810 but still lacks the recovery momentum to erase previous losses and stage a more robust ascent despite the persisting weakness in the greenback. The reason behind metal’s inability to regain ground is the upbeat market mood amid vaccine rollouts, oil market rally, slowing coronavirus cases, stimulus hopes, and expectations for economic recovery across the globe.
The bullion now needs to overcome the $1,830 intermediate resistance in order to regain the 20-DMA, followed by the 200- and 100-DMAs. At this stage, it looks unlikely that the yellow metal will be able to stage a more solid rebound, both from the fundamental and technical points of view.
Furthermore, the fact that the earlier rise prompted some fresh selling at higher levels suggests traders are not ready to push the prices higher just yet. While European stocks opened marginally higher, Wall Street futures point to a stronger open following a long weekend, signaling the upbeat risk sentiment will likely persist further during the day.
So, the prevalent risk-on tone along with surging US Treasury bond yields will likely continue to be seen as a key factor that undermines demand for the safe-haven precious metal. The yield on the benchmark 10-year government bond continues to rise amid the prospects for the passage of the Biden’s $1.9-trillion stimulus package.
Technically, the daily chart continues to paint a downbeat short-term picture, with a possible retest of the $1,800 figure for the first time in nearly two weeks remains on the sellers’ radar. Adding to the negative technical picture, the mentioned moving averages continue to act as resistance levels that could cap possible gains if the bullion manages to find some traction following a break above the $1,827 immediate hurdle.