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·    Gold prices edged lower on Wednesday as a stronger dollar and prospects of higher U.S. interest rates dampened the allure of the safe-haven metal, while palladium held firm after scaling a record peak in the previous session.

 

·    Spot gold was down 0.1% at $1,776.71 per ounce by 0711 GMT. U.S. gold futures were steady at $1,775.90.

 

·    “A stronger dollar and Treasury Secretary Yellen’s rate-hike comments overnight continue to weigh on sentiment in Asia, with multiple failures ahead of the $1,800 an ounce region,” OANDA senior market analyst Jeffrey Halley said.

 

·   The dollar index turned positive and was hovering close to a near two-week peak against its rivals.

 

·    Yellen on Tuesday said she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as U.S. President Joe Biden’s spending plans boost growth.

 

·    Higher interest rates dull gold’s appeal as it increases the opportunity cost of holding non-yielding bullion.

 

·    Investor focus is expected to shift to April payrolls data due on Friday for further cues on the health of the U.S. economy.

 

·    So far, Federal Reserve Chair Jerome Powell has argued the labour market is still far short of where it needs to be to start discussing tapering asset buying.

 

·         Gold Price Forecast: XAU/USD’s continued rejection at $1800 keeps buyers on the edge

Gold (XAU/USD) showed good two-way price movements on Tuesday, settling in the red around $1780. Despite some volatility, the price of gold remained confined within its recent trading range. The metal rallied to test $1800 earlier in the day but faced rejection once again at that level and fell steeply to the $1770 support area after US Treasury Secretary Janet Yellen talked up rate hike expectations and hammered Wall Street indices. Investors scurried to the safe-haven US dollar, downing the USD-denominated commodity. However, Yellen quickly ate up her words while the Fed policymaker Neil Kashkari pour cold water on expectations of monetary policy normalization. Strong US Factory Orders data also added to the upbeat sentiment around the greenback. However, the fall in the US rates helped gold to recover towards the closing.

Gold’s rebound could gain traction if the risk recovery picks up momentum and weighs further on the dollar in the day ahead. However, upbeat US ADP jobs and ISM Services PMI could revive the bullish undertone in the US currency, limiting gold’s advance. Further, if the Wall Street slide extends into Wednesday, it could likely trigger a flight to safety, lifting the dollar’s haven demand once again.

Gold: Four-hourly chart

Looking at the four-hourly chart, gold’s recovery appears at risk, given that the Relative Strength Index (RSI) has flipped into the bearish territory, currently standing at 49.85.

The sellers have defied the odds of a potential move higher after a bull cross was spotted on the said time frame last hours. The 21-simple moving average (SMA) cut above the 50-SMA, presenting a bullish crossover.

Therefore, immediate support at $1778 appears to get tested. That level is the meeting point of the 21 and 50-SMAs.

Further south, the ascending 100-SMA at $1773 could help slow down the decline, below which Tuesday’s low of $1770 will be challenged

On the flip side, a sustained recovery above $1884 could reinforce the uptrend towards $1800. The range play is likely to continue below $1800 unless a daily close above the latter is witnessed.

·         Elsewhere, palladium rose 0.5% to $2,999.49 per ounce after hitting an all-time high of $3,017.18 in the previous session, driven by concerns of a shortage of the metal.

 

·         “Rallies in palladium and platinum are being driven by disrupted or limited supply of both metals meeting a huge jump in demand by car manufacturers,” Halley said.

 

 

·         Palladium, used mainly in emission-reducing auto catalysts for vehicles, has risen more than 22% so far this year.

 

·         Silver was down 0.8% at $26.33, while platinum eased 0.9% to $1,227.02 after hitting its highest level in more than two months on Tuesday. (Reporting by Shreyansi Singh and Brijesh Patel in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)

Reference: Reuters, Fxstreet