Strength in bond yields and the dollar index is keeping gold prices under pressure. The dollar index rallied above four-month high and bond yields continued a recovery rally. The US 10-year Treasury yields rose to 14-month highs on Tuesday (Currently trading near 1.76%) as a selloff in bond markets continued on expectations for stronger growth and inflation ahead.
The dollar index is trading near 93.153 which is sharply higher from recent lows of 89.165. Gold prices are consolidating below $1700, where the upside is capped due to strength in the dollar index and bond yields.
On the economic data front, The U.S. Mar Dallas Fed manufacturing activity index unexpectedly rose +11.7 to a 2-1/2 year high of 28.9, against expectations of a decline to 16.8.
However dovish comments from ECB Governing Council member Hernandez de Cos are likely to support gold prices. He said it is vital for the ECB "to maintain a high level of accommodative monetary policy so that fiscal policy can, in turn, continue its high level of support for the economy until a solid recovery is assured."
Gold prices are also receiving support from the third wave of coronavirus in the Eurozone and rapidly expanding cases in India. The overall number of global Covid-19 cases has surpassed 127.5 million, while the deaths have surged to more than 2.79 million, according to Johns Hopkins University.
According to the CFTC Commitments of Traders report for the week ended Mar. 23, net long for gold futures declined by 6129 contracts to 174067 for the week. The speculative long position gained 6537 contracts, while shorts rose 12666 contracts.
Gold prices are likely to trade negative and face stiff resistance near 20 days EMA at $1732 and 50 days EMA at $1763 while it may find support level around $1686 and $1670.