Gold: Bears take profits, bulls look to $1,830
From a technical perspective, the emergence of some dip-buying near the $1,830 horizontal resistance breakpoint supports prospects for additional near-term gains. Hence, a subsequent strength towards testing a downward-sloping trend-line extending from June 2021 swing high, currently around the $1,860 region, remains a distinct possibility.
On the flip side, any meaningful slide might still be seen as a buying opportunity near the $1,830 region. A convincing break below might prompt some technical selling and accelerate the fall towards the $1,812 zone. This is followed by the very important 200-day SMA, currently around the $1,805 region and an upward sloping trend-line support, extending from August 2021 swing low, currently around the $1,797 region.
The pullback could be attributed to some repositioning trade ahead of the key central bank event risk – the outcome of a two-day FOMC policy meeting. It is worth recalling that the markets have fully priced in an eventual lift-off in March and expect a total of four hikes in 2022. Hence, investors will look for fresh clues over the likely timing of when the US central bank will commence its policy tightening cycle.
In the meantime, elevated US Treasury bond yields and expectations for a faster policy tightening by the Fed continued underpinning the US dollar. This, in turn, was seen as a key factor that acted as a headwind for the dollar-denominated gold. Apart from this, a strong recovery in the global risk sentiment – as depicted by a generally positive tone around the equity markets – drove flows away from the safe-haven precious metal.
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