As long as the dollar retains a bullish tone, the precious metal would continue to struggle

Gold prices bounced from fresh mid-202 lows earlier in the week, recovering above the $1,700 handle. Now, the immediate barrier stands at $1,720, with the bullion lacking upside momentum to stage a more robust and sustained rebound as the greenback is back rallying across the board following a short-term correction witnessed on Tuesday.

Yesterday, the bullion posted the biggest jump in two months as Treasury yields retreated after a strong 3-year note auction. As long as the dollar retains a bullish tone, the precious metal would continue to struggle despite the risk-off tone that dominates global financial markets these days amid bond yields-related concerns. In other words, the rebound may prove to be short-lived as yields could resume their ascent, especially ahead of the upcoming 10- and 30-year Treasury note auctions.

Later today, the US CPI data could affect dynamics in gold prices. Stronger-than-expected results would be a sign of inflation overheating. This, in turn, may add to speculation about the Fed tapering stimulus efforts and push bond yields higher along with the dollar.

In this scenario, the XAUUSD pair could easily get back below $1,700 and even challenge fresh long-term lows below $1,680. Furthermore, as the daily RSI has bounced, to settled in the neutral territory, there is scope for further losses from the technical point as well.

On the upside, if the prices manage to overcome the $1,720 barrier, the $1,740 region could attract selling interest while the key hurdle arrives at $1,760 where the 20-daily moving average lies. However, it looks like that the path of least resistance remains to the downside for now.

In a wider picture, gold prices are nearing the significant 100-SMA on the weekly timeframes. A break below this moving average (today at $1,647) would add to the bearish technical picture surrounding the yellow metal in the medium- to longer-term.


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