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XAU/USD retreats towards $1,795 support ahead of US CB Consumer Confidence

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  • Gold price takes offers to pare the biggest daily gain in three weeks.
  • US Dollar rebound triggers latest XAU/USD pullback amid sluggish markets.
  • Risk catalysts, yields will be in focus for fresh impulse, US CB Consumer Confidence for December eyed.

Gold price (XAU/USD) stays pressured around the intraday low of $1,813 as traders consolidate the biggest daily gain in three weeks heading into Wednesday’s European session.

In doing so, the bright metal takes clues from the firmer US Dollar and the mixed sentiment ahead of the US data. That said, the US Dollar Index (DXY) picks up bids to pare recent losses around 104.10, snapping a two-day downtrend with mild gains.

On Tuesday, the DXY slumped on fears of less Japanese participation in the US Treasury bond market due to the Bank of Japan (BOJ) action. Japan is the biggest holder of the US Treasury bonds and the latest move allows Tokyo to put more funds into the nation than letting it flow outside. Also likely to have weighed on the greenback’s gauge were the receding recession fears as the 10-year Treasury bond yields rose more than the two-year counterpart and hence reduced the yield curve inversion that suggests the market’s bets on the economic slowdown.

Earlier in the day, hopes for China’s more investment, due to the World Bank’s cutting of growth forecasts for the dragon nation and the policymakers’ readiness to battle the recession fears, favor the market sentiment. On the same line could be the US Senate’s advancement of the $1.66 trillion government spending bill, as well as Japan’s upbeat economic forecasts.

It should be observed that the US Treasury bond yields remain firmer even as the stocks and other riskier assets trim recent gains. The reason could be linked to the cautious mood ahead of today’s US Conference Board (CB) Consumer Confidence figures for December, expected at 101.00 versus 100.00 prior.

In addition to the US data, which is likely to exert downside pressure on the Gold price, headlines surrounding China, Japan and bond markets will be important for XAU/USD traders to watch for clear directions.

Gold price technical analysis

The Gold price marks a U-turn from a five-week-old ascending resistance line. Also adding strength to the short-term downside bias is the RSI (14) retreat from the overbought territory.

However, a convergence of the 21 and 50 Simple Moving Averages (SMA), around $1,795, could restrict the metal’s further downside. That said, the $1,800 acts as immediate support.

In a case where the Gold price drops below $1,795, a convergence of the 100-SMA and an upward-sloping support line from November 09, near $1,787, acts as the key level to beat for the XAU/USD bears to retake control.

Alternatively, an upside clearance of the immediate resistance line near $1,825 needs validation from the fortnight-long resistance line near $1,836 to convince the Gold buyers.

Following that, highs marked in June at around $1,880 will be in focus for the XAU/USD bulls.

Overall, Gold is likely to witness a pullback but the bullish trend stays on the table.

Gold price Four-hour chart

Trend: Pullback expected


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