The US 10-year Treasury yields dipped to two-week lows, adding to the upbeat tone surrounding the yellow metal
Gold prices have settled just below early-January highs registered last week around $1,890. The precious metal continues to cling to the upper end of the trading range as the dollar plunged to four-month lows, staying on the defensive nearly across the board on Tuesday.
The USD index saw another sell-off as inflation fears continue to recede after the Federal Reserve’s Bullard said it was not time to think about tightening when the country is still in the pandemic. against this backdrop, the US 10-year Treasury yields dipped to two-week lows below 1.60%, adding to the upbeat tone surrounding the dollar-denominated commodity.
Now, the bullion has been trading directionless in a tight range for the third session in a row, pointing to a bullish consolidation phase amid slightly overbought RSI on the daily charts. Despite the prices are steady, it would be prudent to wait for a decisive break above the $1.890 mentioned tops before positioning for a further ascent beyond the $1,900 figure last seen at the start of this year.
Today’s closing will be important as a break below the $1,870 area could negate the upbeat near-term technical picture. In a wider picture, the XAUUSD pair remains above the key moving averages while trading above the $1,850 area, suggesting downside risks are limited at this stage.
In the short term, gold prices could see a pickup in volatility around fresh US economic data and Fedspeak including Richmond Fed President Thomas Barkin and Vice Chair Randal Quarles. Dovish comments could add to the selling pressure surrounding the dollar. In this scenario, the USD-denominated commodity may receive a boost to challenge the mentioned highs. However, the precious metal could need an extra catalyst to overcome the $1,900 barrier last seen in January.