A hawkish tone from Powell triggered a rise in Fed rate hike bets along with US Treasury yields
Following three days of losses, gold prices attempt to bounce from one-month lows seen around $1,770 on Tuesday. The XAUUSD pair regained a bullish bias on the first day of December due to lingering fears over the new omicron variant of the coronavirus, but the recovery momentum looks too modest to bet on more significant gains in the short term.
Furthermore, risk sentiment has improved while the dollar turned steadier on Wednesday after the Federal Reserve Governor Powell said the central bank could accelerate tapering during the upcoming meeting later this month. A hawkish tone from Powell triggered a rise in Fed rate hike bets along with US Treasury yields, which is capping the upside potential in the gold market. Following Powell’s remarks, the money markets started pricing in the possibility of at least a 50 bps rate hike by the end of next year.
Of note, the non-yielding precious metal briefly exceeded the $1,800 figure on Tuesday but failed to preserve gains amid the emergence of fresh buying pressure surrounding the greenback. Should dollar demand pick up again anytime soon, the bullion may attract fresh sellers and target November lows around $1,758, followed by the $1,750 zone. On the upside, the immediate resistance is now represented by the $1,791 figure where the 100- and 200-DMAs converge.
Technically, XAUUSD could depreciate further in the near term amid the recent repeated failures to hold above the key simple moving averages on the daily charts. To shrug off the current bearishness, the yellow metal needs to settle above the 20-DMA, currently at $1,821. On the weekly timeframes, the technical picture keeps deteriorating as well, with the bullion retreating from mid-2021 highs for the third week in a row while the RSI is pointing slightly lower in neutral territory.