Gold jumps to multi-day tops, around $1945-50 supply zone
- A sharp intraday pullback in the USD drove some flows towards the dollar-denominated commodity.
- Strong opening in the US equity markets, positive US bond yields might keep a lid on any strong gains.
- Bulls need to wait for some follow-through buying before positioning for a move to the $1970-72 area.
Gold rallied around $20 during the early North American session and shot to three-day tops, near the $1945-50 supply zone in the last hour.
The US dollar witnessed a dramatic intraday turnaround from multi-week tops and has now drifted into the negative territory. This, in turn, assisted the dollar-denominated commodity to reverse an intraday dip to the $1920 area.
However, a combination of factors should hold investors from placing any aggressive bullish bets and keep a lid on any further gains. The US equity markets opened with strong gains and might undermine the precious metal's safe-haven demand.
This coupled with a positive tone around the US Treasury bond yields would further cap the upside for the non-yielding yellow metal. Hence, it will be prudent to wait for some follow-through buying before positioning for any further appreciating move.
From a technical perspective, the commodity on Tuesday showed some resilience below the 50-day SMA and staged a goodish bounce from the $1906 area. A subsequent strength beyond the $1950 region will now be seen as a fresh trigger for bullish traders.
The commodity might then accelerate the momentum further towards the $1970-72 horizontal resistance. The mentioned barrier coincides with a four-week-old descending trend-line, which if cleared will pave the way for additional gains for the metal.
Technical levels to watch