Gold failed to capitalize on its intraday positive move back closer to Tuesday’s one-week tops. Sliding US bond yields undermined the USD and provided a modest intraday lift to the metal. Optimism over a strong global economic recovery capped any further gains for the XAU/USD.
Gold struggled to preserve its intraday gains and retreated to the lower end of its daily trading range, around the $1805 region during the early European session.
The precious metal gained some traction during the first half of the trading action on Wednesday and built on the overnight bounce from the sub-$1800 level. The treasury yields witnessed a modest pullback after Fed Chair Jerome Powell on Tuesday reiterated a very dovish policy stance, saying that interest rates will remain low and the Fed will keep buying bonds to support the US economic recovery.
Sliding US bond yields kept the US dollar bulls on the defensive, which, in turn, was seen as a key factor that provided a modest lift to the non-yielding yellow metal. Apart from this, a softer tone around the equity markets further benefitted the safe-haven XAU/USD and remained supportive of the uptick. That said, the optimistic global economic outlook capped the upside for the precious metal.
The impressive pace of vaccinations for the highly contagious coronavirus disease, along with the prospects for a massive US fiscal spending plan has been fueling hopes for a strong global economic recovery from the pandemic. In the latest development, House Majority Leader Steny Hoyer said that a vote on the US President Joe Biden's proposed $1.9 trillion stimulus package will be held on Friday.
This makes it prudent to wait for some strong follow-through buying beyond the overnight swing highs, around the $1816 region before positioning for any further appreciating move. The next relevant resistance is pegged near the $1823-25 region ahead of the $1835 level, which if cleared decisively will be seen as a fresh trigger for bullish traders and set the stage for additional gains.