Gold slipped to four-week lows just below the $1,770 region on Tuesday to register the third bearish session in a row. Today, the yellow metal attracted buyers that took the prices to the $1,790 area where the 100- and 200-DMAs converge. Despite the recent bounce, the bullion seems vulnerable as long as the prices stay below the $1,800 psychological level that represents the immediate barrier for bulls.
The US dollar has steadied on Wednesday as the Federal Reserve Governor Jerome Powell said the central bank would discuss a quicker tapering at the upcoming meeting on Dec. 15. A hawkish shift in Powell’s tone triggered a solid recovery in US Treasury yields amid rising rate hike expectations. Now, the money market expects the first rate hike to come in June 2022 (or in September).
So far, the dollar refrains from a significant bullish reaction to the message while staying afloat following the recent sell-off that took place despite risk aversion amid rising concerns over a new coronavirus variant. However, the greenback could resume the ascent in the coming days if the upcoming economic data out of the United States exceeds expectations.
Gold Could Move Lower
In this scenario, the XAU/USD pair would come under renewed selling pressure and finish the week on the defensive. In the immediate term, the non-yielding yellow metal may try to regain the $1,800 handle, but it looks like the path of least resistance remains to the downside for the time being.