XAU/USD defends $1,800 amid higher US Treasury yields

Update: Gold prices surrender the previous session’s gains and struggle to defend the $1,800 mark. The US 10-year Treasury yields remain elevated near 1.63% ahead of the upcoming major central bank meetings this week. The precious metal rose almost 1% in the US session after reaching a high of $1,1810.06.

The US dollar trades near 93.90, recovering from a near one-month low in the previous session. A higher USD valuation makes gold more expensive for the buyers holding other currencies.

Investors are gearing up for the Bank of Japan (BoJ) and the European Central Bank (ECB) monetary policy decisions on Thursday, although neither of the central banks is likely to announce any change in the policy. Still, the forward guidance on growth and inflation will be a key to set the market tone. The Bank of England (BoE) member Silvana Tenreyro sounded less optimistic on interest rate hikes in her speech delivered on Monday, in the light of her comments on the job market.

Gold (XAU/USD) consolidates recent gains around $1,805, refreshing intraday low during early Tuesday following a five-day uptrend. Although risk-on mood underpinned the yellow metal to stay firmer of late, the US dollar rebound challenges the buyers ahead of important data/events of the week.

Having recovered from a fresh monthly low, the US Dollar Index (DXY) keeps the previous day’s advances, up 0.06% on a day near 93.90 by the press time. The hawkish Fedspeak and a blackout period preceding the advance estimation of US Q3 GDP probe the optimists and direct the cautious traders toward the greenback.

Also recently contributing to the DXY strength, weighing on the gold prices, were the recently positive US Treasury yields. That said, the US 10-year Treasury yields snap two-day downturn near 1.64% at the latest.

Market sentiment stayed firmer the previous day as comments from US President Joe Biden and House Speaker Nancy Pelosi propelled stimulus hopes, joining positive headlines from China’s Evergrande and Tesla’s fresh record high.

While portraying the mood, Wall Street benchmarks refreshed all-time high while the S&P 500 Futures print mild gains by the press time.

Given the lack of major data/events ahead of Thursday’s US GDP, second-tier releases like US Consumer Confidence and Durable Goods Orders may entertain gold traders. Also important will be the moves of the US Treasury yields and headlines from China, as well as relating to the US stimulus.

Technical analysis

Despite the recent pullback, gold keeps upside break of the key hurdle comprising 200-DMA and a descending trend line from early June, now support around $1,793.

Given the bullish MACD signals and an absence of the overbought RSI conditions, not to forget the metal’s sustained trading beyond the $1,800 threshold, gold prices are likely rushing towards the $1,834 resistance, comprising tops marked since July.

During the quote’s upside past $1,834 will aim for the $1,900 round figure with the mid-$1,800s likely probing gold buyers on their way.

In a case of the latest declines dragging gold below $1,793 resistance-turned-support, bulls may not lose hope until the commodity remains beyond the monthly support line, around $1,777 by the press time.

Overall, gold is up for pleasing the bulls before the next test around $1,834.

Gold: Daily chart

Trend: Bullish