Investing.com – As it broke above the 106-point level, it appears poised to retest the 107 point on its way back to 20-year highs.
Meanwhile, the safe-haven lost its sheen as gold hit its lowest level in nearly two weeks after giving up key support levels at 1,800 points.
That coincided with a rush of statements from central bank officials, while markets awaited the minutes of the Federal Reserve meeting in July, which will be released tomorrow, Wednesday.
Traders await what the central bank’s minutes will reveal as it hints at conditions that could push the bank to tighten again in September.
Today, in the early hours of trading on Tuesday, an ounce fell to $1791.8, losing nearly $6, or about 0.35%.
Gold contracts fell 1%, or the equivalent of $17.40, to settle at $1798.10 an ounce, the lowest level in more than a week, at the close of trading on Monday.
Gold has come under negative pressure after China’s economic data showed a slowdown in the pace of recovery from the effects of the Covid-19 pandemic, which could lead to lower demand for gold in the world’s biggest metal consumer.
Side-by-side, Venezuelan central bank data showed the bank’s gold reserves fell by about 6 tonnes to 73 tonnes in the first half of the year, a 50-year low.
In contrast, Richmond Fed President Thomas Parkin said the central bank should keep raising rates until it is clear inflation will reach its 2% target.
Now the dollar
On the other hand, the dollar index continued to recover, reaching 106.8 points in early trade today on Tuesday, the highest level since the July 26 session and its highest level in almost 3 weeks.
The key dollar index rose against a basket of six major currencies during Tuesday’s trade, falling and gaining 0.2% against the pound to 106.7 points.
On the other hand, the 10-year yield rose to 2.8% with an increase of 0.0109 points in these moments of Tuesday’s trade.
The main risk
The main risk for this week is Wednesday’s FOMC meeting minutes, which could set a new direction for bullion if it points to the central bank’s policy path.
A daily close below the 50-day moving average (DMA) resistance-support at $1,782 is crucial to offset the momentum of the recent recovery.
Bears will then look for the $1,770 round number, below which the 21 DMA will be tested at $1,756.
On the upside, another strong attempt above the $1800 mark would be the monthly high of $1,808, above which fresh buying opportunities would emerge.
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