During Tuesday’s Asian session, sellers poked a short-term critical support confluence near $1,840, pushing gold price (XAU/USD) to a one-week low, down 0.13 percent intraday. The precious metal’s recent downturn, on the other hand, could be connected to a stronger US Dollar Index (DXY), which in turn draws cues from US Treasury yields.

It’s worth mentioning that the US Dollar Index (DXY) is dribbling around mid-102.00s following a two-day upswing, not to mention the first weekly leap in three, while US Treasury yields are higher around 3.04 percent after rising 10 basis points (bps) on Monday, extending the first weekly gains in four.

Upbeat stories from China and market concerns ahead of the European Central Bank’s (ECB) monetary policy meeting on Thursday and the US Consumer Price Index (CPI) for May on Friday appear to be putting GOLD sellers to the test.

Friday’s high US Nonfarm Payrolls (NFP) and the Fed’s last dose of aggressive talk before the blackout period supported US Treasury yields to break a three-week downturn. The same logic explains the newly growing hopes for a 0.5 percent rate hike in September, despite previously sparse discussion.

Gold traders should keep an eye on the risk catalysts and the US CPI and the ECB for clear direction in the near future. Short-term movements may be influenced by the month’s US Goods and Services Trade Balance, which is expected to be $-89.5 billion, down from $-109.8 billion in prior readings.

Gold Technical Outlook

As sellers battle the 200-DMA and an upward sloping support line from mid-May, the gold price justifies a probable bear cross and RSI retreat. The metal’s U-turn from a fortnight-old horizontal resistance region near $1,870-75 adds to the bearish sentiment. The XAU/USD bears will need a convincing negative break of the $1,840 support confluence to approach the previous swing low of around $1,828.

Following that, a drop towards the $1,800 level and subsequently to May’s low near $1,785 is not out of the question. Alternatively, gold buyers will need a decisive upward break of $1,875 before challenging a confluence of the 50-SMA near $1,888-90. Good luck!