XAU/USD looks to regain $1,700 as US Treasury yields drop
Gold consolidates recent losses from nine-month low flashed the previous day.
US stimulus may arrive on Wednesday, US 10-year Treasury yields snap four-day winning streak.
Risks remain mildly bid, US dollar refreshes highest levels since November 2020.
Gold picks up bids near $1,683, up 0.20% intraday, during early Tuesday. The yellow metal recently benefited from the recent halt in bond rout while also ignoring the US dollar’s sustained rally.
The yellow metal’s run-up could be traced from easing reflation fears after US House Speaker Nancy Pelosi recently signaled that the much-awaited American fiscal stimulus worth $1.9 trillion will be out by Wednesday, versus widely expected Tuesday. The same pulled the US 10-year Treasury yields back, currently down 2.6 basis points (bps) to 1.568%, while snapping a four-day rally.
Even so talks about global economic recovery and a light calendar keep S&P 500 Futures up over 0.20% whereas the US dollar index (DXY) rises to the fresh high since November 24, 2020. It’s worth mentioning that stocks in Asia-Pacific also trade mixed as traders are cautious ahead of the key relief package from America.
On Monday, the yellow metal dropped to the fresh low since June 2020 amid the US dollar rally and strong Treasury yields defying commodity bulls. However, the bears seem to have stopped for a breather while waiting for the US House session on Tuesday.
Additionally, chatters concerning the vaccinations and economic recovery should also be observed as fears of the coronavirus (COVID-19) variants battle unlock efforts in the West. Should the global pick-up extends, the yellow metal may have a further weakness to see.
Unless breaking a downward sloping trend line from August 2020, currently around $1,675, gold prices are likely to witness corrective pullback amid oversold RSI. Also acting as the strong support are the lows marked during May and June 2020 around $1,670. Meanwhile, an upside clearance of $1,700 threshold will eye for $1,740 before attacking the key hurdle to the north, marked in November last year around $1,765.