In the medium term, the outlook for gold depends on dynamics in long-term Treasury yields
Gold prices have been struggling for direction these days, failing to stage a robust recovery despite dollar weakness. The yellow metal faces the immediate hurdle around $1,750 while on the downside, the key short-term support is represented by the 20-DMA, today at $1,732. Following yesterday’s bounce from this moving average, the bullion regained upside bias, targeting the mentioned barrier during the European hours.
In the medium term, the outlook for gold depends on dynamics in long-term Treasury yields as further decline could open the door for the precious metal to gain in the coming weeks. Earlier in the year, an aggressive sell-off in bonds undermined the gold market dramatically. Now, as the yields retreat from more than one-year highs, the metal feels more confident.
In the immediate term, US retail sales figures will be in focus later today. If the figures exceed expectations significantly, the release could trigger further losses for the XAUUSD pair. On the other hand, if the greenback fails to capitalize on strong numbers, the prices may retain a bullish bias on an intraday basis.
On the positive side for the safe-haven gold, investors now express concerns over potential US sanctions on the Russian sovereign debt. Rising coronavirus cases in many countries adding to a more cautious tone among market players as well.
From the technical point of view, a decisive break above the $1,760 area would mark the current range breakout. As long as the prices stay below this barrier, upside risks remain limited. In a wider picture, the precious metal needs to regain the descending 100-DMA just above the $1,800 figure in order to shrug off the current weakness. On the downside, the key support is represented by the $1,675 region that triggered a bounce in late March.