The precious metal slipped below the $1,800 figure and has been struggling to regain this level since then
Gold prices switched into recovery mode on Wednesday following two days of losses. However, the upside momentum lacks follow-through as the dollar remains on the offensive. The USD index rose to the 92.70 region, picking up the extra pace on the back of risk aversion. Furthermore, yields of the key US 10-year note climbed to new multi-day highs beyond the 1.38% figure.
Yesterday, the precious metal slipped below the $1,800 figure and has been struggling to regain this level since then. The XAUUSD pair was last seen changing hands around the 20-DMA which arrives just below $1,800. A sustained break below this figure and the mentioned moving average could confirm the bearish continuation pattern in the short term.
On the positive side, the bullion refrains from deeper losses due to safe-haven demand amid the risk-off tone in the financial markets triggered by worries about the fast-spreading Delta variant of the coronavirus.
On the other hand, expectations for an imminent Fed taper announcement later this year might continue to support the greenback thus capping the bullish potential in the gold market.
Of note, in his recent remarks, the Fed’s Bullard said that the central bank should move forward with a plan to trim its pandemic stimulus program “despite a slowdown in job growth last month”. Last month, Bullard noted that he would like the central bank to start reducing its asset purchases soon.
If the Federal Reserve continues to send hawkish signals to the financial markets in the short term, the dollar could add to gains. In this scenario, the yellow metal would see deeper losses in the coming days/weeks. Should the mentioned 20-DMA give up any time soon, the $1,780 region will come into market focus next.
