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Gold maintained its offered tone through the mid-European session and refreshed daily lows, around the $1721 region in the last hour.
The Gold prices came under some renewed selling pressure and erased the previous day’s modest recovery gains from the lowest level in over eight months. The safe-haven precious metal was weighed down by the underlying bullish tone in the financial markets, bolstered by the optimism about a strong global economic recovery.
Apart from this, a sudden pick up in the US Treasury bond yields exerted additional downward pressure on the non-yielding yellow metal. The US bond market has been reacting to the reflation trade, which has been fueling speculations for an uptick in inflation and doubts that the Fed would retain ultra-low rates for a longer period.
Meanwhile, a fresh leg up in the US bond yields assisted the US dollar to regain positive traction. The greenback was further supported by the upbeat US economic outlook amid the progress on COVID-19 vaccinations and a massive US fiscal spending plan. This was seen as another factor driving flows away from the dollar-denominated commodity.
It will now be interesting to see if the gold is able to attract any buying interest or bearish traders aim to challenge the $1700 mark as the focus now shifts to the US macro data. Wednesday’s US economic docket highlights the releases of the ADP report on private-sector employment and ISM Services PMI for February.
The data, along with the US bond yields, would influence the USD price dynamics. Apart from this, the broader market risk sentiment will further contribute to produce some short-term trading opportunities around the gold.