Gold prices came under pressure on Tuesday as the U.S. dollar strengthened across the board following the Federal Reserve Chair's semi-annual testimony before the Senate.
At the time of writing, the spot price XAU/USD is trading at $1,818 an ounce, 1.55% lower on the day, having hit a one-week low of $1,815.
The U.S. dollar rallied on the back of hawkish remarks from Fed's Chair Jerome Powell. In a hearing before the Senate, he signaled his willingness to raise rates at a faster pace. He noted that the ultimate level of interest rates is likely to be higher than previously anticipated, given that the latest economic data have come in stronger than expected.
The next round of data, including February nonfarm payrolls and inflation numbers, will likely determine whether the Federal Reserve will opt for a 25 or a 50 bps rate hike at the March 21, 22 FOMC meeting.
After the testimony, Wall Street indexes plunged while short-term Treasury yields jumped, with the 2-year note rate reaching its highest level in 15 years at 4.979%. Higher yields further boosted the dollar, weighing on XAU/USD.
From a technical perspective, the XAU/USD short-term bias has turned bearish according to indicators on the daily chart, which have accelerated south, while the price broke below the 20-day Simple Moving Average (SMA) and approaches the $1,800 psychological level, critical short-term support point.
A break below the latter could open the door to a deeper decline targeting the 200-day SMA at around $1,775. On the other hand, the immediate resistance area is seen at the $1,845-50 region, followed by the weekly highs at the $1,860 zone.