Eyes on U.S. Inflation Data
Gold closed at $1728.69 after placing a high of $1738.21 and a low of $1717.76. After falling for six consecutive sessions, gold prices continued to consolidate on Tuesday. They reversed their course based on expectations that the Federal Reserve might take monetary action to push the U.S. dollar significantly.
Despite the multiple positive news, the broad-based U.S. dollar succeeded in extending its previous four-day winning streak. It remained well bid during the second half of the Asian session as the passage of U.S. President Joe Biden's infrastructure spending pushed the U.S. dollar up.
The previously released robust U.S. data favoring concerns over tapering and rate hike kept gold under pressure. At the same time, the optimistic data placed a positive impact on U.S. dollar prices. In simple words, the gaining bias in the U.S. dollar was seen as one of the major factors that kept the gold prices under pressure. For all the new members, the price of gold is inversely related to the price of the U.S. dollar.
Alternatively, the continuous global uptick in COVID-19 cases and concerns overextending a lockdown in Australia keep challenging the market trading mood. This may give some support to the safe-haven gold prices. In the meantime, the chatters over the U.S. budget remain n favor of gold. U.S. Republicans showed readiness to stall budget talks and not support Democrats also helped the gold price a bit before the latest pullback.
Looking forward, the traders will keep their focus on the U.S. economic docket, which will highlight the core consumer price index, due to be released later in the day. Meanwhile, virus updates and stimulus news will be crucial to follow.
Gold Intraday Technical Level
Pivot Point: 1732.60
Gold - XAU/USD - Technical Outlook
On Wednesday, gold is trading with a bearish bias at the 1,731 level. On the hourly timeframe, the metal has already completed 50% Fibonacci retracement at 1,743 level, and now this level is extending resistance to gold. A bearish bias continues, and gold is going after 23.6% Fibonacci retracement at 1,721 levels. This level will be extending solid support on Wednesday. The MACD is coming out of the oversold zone, and the closing of candles below the 1,742 level has the potential to reverse gold's bearish correction. Therefore, the investor's focus will be staying at the 1,732 level. In case of a bullish breakout of 1,732 levels, the next resistance will prevail at 1,745 areas. Bearish bias dominates today. All the best!
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