VOT Research Desk
A stronger US Dollar kept a lid on any additional gains, but gold drew some dip-buying near the $1,753 mark on Monday and settled close to its best level since mid-August. Federal Reserve Governor Christopher Waller’s hawkish comments on Sunday, in which he stated that the central bank will not relent in its fight against inflation, caused a little increase in the yields on US Treasury bonds.
Due to expectations of a rate hike, the yield on US government bonds with a two-year maturity registered its largest daily gain since November 3. This hurt the dollar-denominated commodity and helped the USD halt the post-US CPI decline to over three-month lows.
Nevertheless, a surprisingly low level of consumer inflation in the US in October raised expectations for a more gradual tightening of monetary policy by the Fed. Fed Vice Chair Lael Brainard reiterated the wagers, suggesting that the US central bank will likely raise rates at a slower clip in the upcoming months.
At the current 91% probability level, a 50 basis point rate increase at the December FOMC meeting is expected. A higher dollar was partially offset by this, and the non-yielding yellow metal continued to receive support.
However, there has been no further buying, and gold has remained below $1,775 through Tuesday’s Asian session.
Gold Technical Analysis
Technically speaking, the 100-day SMA was decisively broken through last week for the first time since May, which was a new trigger for bullish traders.
Additionally, confirmation above the $1,750 region and the advent of some dip-buying on Monday support the upbeat picture.
As a result, a subsequent strength towards reclaiming the psychological $1,800 mark, close to the crucial 200-day SMA, appears to be a real possibility. Bulls may decide to take some profits off the table close to the theoretically crucial moving average given that the RSI (14) on the daily chart has moved close to breaking into overbought territory.
On the other hand, the overnight swing low, near $1,753, appears to be protecting the immediate downside right now.
Near the strong horizontal resistance breakpoint between $1,730-$1,725 any further decline could be viewed as a buying opportunity. The latter is in line with the 100-day SMA and should serve as a stable platform for gold in the near future.
The positive bias will be undermined by the continued weakness below, which will also trigger some technical selling and open the door for a decline back towards the round $1,700 mark.
The corrective slide may continue toward the next important support located close to $1,675-$1,673 in price.
