Gold trades in red near $1,650 despite broad-based USD weakness
- US Dollar Index drops below 100 on Tuesday.
- Wall Street's main indexes build on Monday's strong gains.
- 10-year US Treasury bond yield adds more than 10%.
After gaining more than $60 on Monday, the troy ounce of the precious metal struggled to continue to gain value on Tuesday. As of writing, the XAU/USD pair was trading at 1651, erasing 0.75% on a daily basis.
Risk rally remains intact
Although the USD selloff intensified on Tuesday with the US Dollar Index dropping below the 100 handle erasing nearly 1% on the day, the pair reversed its direction as the upbeat market mood made it difficult for gold to find demand.
Following Monday's impressive rally, Wall Street's main indexes opened the day sharply higher on Tuesday. At the moment, both the Dow Jones Industrial Average and the S&P 500 are up more than 1% on the day while the Nasdaq Composite is adding only 0.3%. Additionally, the 10-year US Treasury bond yield was last seen rising 12% on the day at 0.759% to reflect the strengthening risk appetite.
There won't be any significant macroeconomic data releases from the US in the remainder of the day and the risk perception is likely to continue to impact the pair's movements.
Commenting on gold's recent performance, “gold has seen an exact move to our long-held ‘measured base objective’ at $1700/05," said Credit Suisse analysts. "Whilst we suspect further consolidation can emerge here, as we have repeatedly highlighted our core outlook stays bullish and we look for a move above $1705 in due course, with resistance next at $1796.”
Technical levels to watch for