It looks like the bullion would stay below $1,800 as long as the dollar continues to trade within a strong bullish trend
Gold prices have been stuck in a tight range since the beginning of the week, struggling to overcome the descending 20-DMA. The bullion lacks upside momentum as the dollar remains steady and elevated across the market. Earlier in the day, the dollar index retreated marginally but managed to stay afloat due to the resurgent safe-haven demand amid widespread risk aversion.
Investor sentiment turned sour across the globe on Tuesday as surging energy prices fuel inflation concerns. Also, market players are nervous ahead of the quarterly earnings season that starts on Wednesday. Against this backdrop, dollar demand persists, capping gains in gold prices. The immediate barrier arrives around the $1,760, followed by the $1,1780 region that capped the upside momentum last week.
It looks like the precious metal would see more volatile trading in the coming days, however. The US inflation report on Wednesday would affect gold through dollar dynamics. If the figures exceed expectations, the USD index would climb to fresh yearly tops amid rising odds of tapering asset purchases by the Federal Reserve as soon as November. In this scenario, the yellow metal could get back below the $1,750 region to challenge the $1,745 area. Furthermore, hawkish FOMC meeting minutes could add to the selling pressure surrounding gold.
Meanwhile, on the upside, the bullion needs to see a decisive break above the mentioned moving average, today at $1,757, in order to retarget the $1,780 region that represents the intermediate barrier on the way towards the $1,800 figure last seen in mid-September. However, it looks like gold prices would stay below this figure as long as the dollar continues to trade within a strong bullish trend. In the near term, the XAUUSD pair could make fresh recovery attempts around $1,760.