TEHRAN (Iran News) – Metals printed fresh daily highs, offering a completely different scenario from hours ago. Gold bottomed earlier at $1810 and when it seemed ready to extend the slide, bounced sharply rising to $1830, hitting a fresh daily high.
Near the end of the week, XAU/USD is hovering around $1825, flat for the day and about $10 above the level it had a week ago. Still, some sharp moves seem likely considering that volatility in the forex market surged.
A decline of the US dollar triggered the rally in gold. The DXY dropped from multi-day highs above 90.70 to 90.39 in a few hours. At the same time, US yields move off highs adding support to metals. XAG/USD broke above $27.20 and reached 27.42 a two-day high.
The week is about to end on a soft tone for the US dollar ahead of a long weekend due to a holiday on Monday in the US. Also, the Spring Festival in Asia could keep volume depressed at the beginning of next week.
Gold lost some additional ground during the early North American session and dropped to the lower end of its weekly trading range, around the $1810 region.
The precious metal witnessed some heavy selling for the second consecutive session on Friday and was weighed down by a combination of factors. Despite doubts about the pace of the US economic recovery, the US dollar was back in demand and exerted some follow-through pressure on the dollar-denominated commodity.
The USD got an additional boost from a strong pickup in the US Treasury bond yields. The US bond market has been reacting strongly and pricing in the prospects for the passage of US President Joe Biden’s $1.9 trillion stimulus package. This was seen as another factor driving flows away from the non-yielding yellow metal.
That said, a softer risk tone extended some support to the safe-haven XAU/USD and helped limit any further losses, at least for the time being. The commodity has managed to recover a bit from daily lows and was last seen trading around the $1817-18 region, though the near-term bias remains tilted in favor of bearish traders.
Market participants now look forward to the US economic docket, highlighting the only release of the Michigan Consumer Sentiment Index for February. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus. Traders might further take cues from the broader market risk sentiment.