Good morning, traders.

The precious metal GOLD prices closed at 1685.06 after placing a high of 1714.36 and a low of 1678.77. Gold extended its losses on Tuesday and fell sharply below 1680 level and reached its lowest level since 8th March. On Tuesday, the sharp decline in yellow metal came in after the US dollar and the US Treasury yields rose to their highest levels. The US Dollar Index that measures the greenback’s value against six major currencies, reached 93.35 level and added fresh pressure on yellow metal prices. The sharp hike followed the sudden rise in US Treasury yields on the 10-year note that reached its highest since January 2020 at 1.77%.

Despite the rising number of infections from a new variant of the virus, the hopes for economic recovery were rising, supporting the surging prices of the US dollar and US Treasury yields. The hopes for quick economic recovery were supported by the combination of accelerating vaccine rollout program and the prospects of additional infrastructure spending. On Tuesday, the optimism about the faster than expected economic recovery rose after the news came in that US President Joe Biden was set to outline his proposed infrastructure package. On Wednesday, Biden is expected to announce a plan to overhaul infrastructure and manufacturing.

The Congressional committees were reportedly being briefed on the proposal on Tuesday. The President is expected to call for spending more than $3 trillion to improve the nation’s infrastructure systems. It raised the hopes for quick economic recovery that lifted US dollar and Treasury yields and weighed heavily on gold prices.

On the data front, at 18:00 GMT, the Housing Price Index for January declined to 1.0% against the forecast 1.2% and weighed on the US dollar. The S&P/CS Composite-20 HPI for the year dropped to 11.1% against the forecast 11.4% and weighed on the dollar and also capped further losses in the precious metal. At 19:00 GMT, the CB Consumer Confidence in March rose to 109.7 against the forecast 96.9 and supported the US dollar, and aided in further downside momentum of the yellow metal. Furthermore, On Tuesday, the Federal Reserve Vice Chair Randal Quarles said that a group of financial regulators would lay out recommendations in July to improve the resilience of money market funds and minimize the chance they will need government support in the future.

On the other hand, the Federal Reserve bank of Atlanta Raphael Bostic said that the coming summer could see millions of Americans getting their jobs back if the current trend holds and progress against the pandemic continues. He added that a burst of activity and performance could be seen in the coming months of summer, leading to an even more robust recovery.

On Tuesday, the New York Federal Reserve President John Williams said that the reasons to be optimistic about the United States’ economy have increased as more Americans were vaccinated, and households and businesses were benefiting from fiscal support. He added that the Fed’s low-interest rates reduce the borrowing costs that can help the economy rebound quickly. All these Fed officials’ comments also supported the US dollar’s rising prices and weighed heavily on gold prices on Tuesday.

Daily Technical Levels
Support Resistance
1699.46 1728.76
1686.73 1745.33
1670.16 1758.06
Pivot Point: 1716.03

GOLD is trading with a bearish bias at $1,683 level, supporting around $1,677 level and resistance around $1,687. A bearish breakout of the $1,678 level can trigger further selling until the $1,670 level. The MACD and RSI support the selling trend, but we may see a slight bullish correction until the $1,687 level before selling. Let’s consider selling until below $1,687 mark. Good luck!