Gold Bearish Bias Dominates Below $1,737 – All Eyes on US CPI Figures Ahead

During Wednesday’s Asian trading session, the price of the safe-haven metal, gold, managed to recover some of its losses of the previous day, drawing some modest bids below the $1,750 level, as the fresh risk-off wave, triggered by the coronavirus woes, tends to boost the GOLD prices slightly. However, the gains in the yellow-metal prices could be short-lived and temporary, as the strengthening US dollar, and rising bond yields typically push the gold prices down.

Meanwhile, the market optimism, due to the US infrastructures spending plan, also challenged the gold prices. The US Senate passed a weighty infrastructure plan yesterday. This news sent US Treasury yields to their highest levels since mid-July 2021, and US shares also closed at record highs. The resulting upbeat market sentiment tends to undermine the safe-haven assets, including gold.

Despite the market optimism over the passing of the infrastructure spending plan by the US Senate, the market trading sentiment failed to extend its positive overnight performance and turned sour ahead of Wednesday’s European session.

The reason for this could be attributed to the continuous uptick in COVID-19 cases globally. The record highs in COVID cases in New South Wales (NSW) and Melbourne has urged policymakers to extend the virus-led lockdowns for another seven days. In Japan, the number of new coronavirus cases reported remains above 10k.

However, the losses in the market trading sentiment could be temporary, as the US Senate passed a $1 trillion infrastructure spending plan yesterday. After months of jostling with details, the US Senators finally agreed on a $1.2 trillion stimulus package that might meet fewer hurdles in the House before it reaches US President Joe Biden for his signature.

The positive headline pushed the US Treasury yields to their highest levels since mid-July 2021, and US shares also closed at record highs. Thus, the strong optimism and the firmer USD are keeping the GOLD price under pressure.

Conversely, the resistance holds at a 38.2% Fibonacci level of 1,737. A bearish crossover at this level could lead the GOLD price further down towards the 1,716 support level. A bearish bias dominates below the 1,728 level today. Let’s keep an eye on the US CPI data for more updates on the gold trend. Good luck!