Update May 11: Following the previous week’s impressive rally, the XAU/USD pair closed virtually unchanged on Monday and stayed in a consolidation phase around $1,830 during the European trading hours on Tuesday.
Update: Gold finally broke down of its consolidative trading range and refreshed daily lows, around the $1,825 region heading into the North American session.
The latest leg of a sudden fall over the past hour or so could be solely attributed to a goodish pickup in the US Treasury bond yields, which tends to drive flows away from the non-yielding yellow metal.
However, a combination of factors might hold traders from positioning for any meaningful corrective slide and help limit deeper losses.
This makes it prudent to wait for some strong follow-through selling before confirming that gold has topped out in the near term.
Update: Gold extended its sideways consolidative price action through the first half of the European session and remained confined in a range below the $1,840 level.
Hence, the key focus will remain on Wednesday’s release of the US consumer inflation figures, which will play a key role in influencing the next leg of a directional move for the non-yielding yellow metal.
Update: Gold edge higher around $1,837, up 0.10% intraday, ahead of Tuesday’s European session.
Although the reflation fears jump back to the table, exerting downside pressure on the stock futures, the US Treasury yields remain mostly inactive, despite pausing a two-day uptrend.
At the time of writing, XAU/USD is trading at $1835.75, down 0.11% on the day.
On the hourly chart, the downward sloping line from the previous day’s high of $1,845.46, acts as a wall of defense for gold bulls, keeping prices a tad below the $1,840 mark.
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