Gold prices are rising as bond yields drop amid risk aversion. However, with the greenback starting to outperform its rivals, the pair struggled to push higher and went into a consolidation phase. Following a drop to the 96.40 area, the US Dollar Index recovered to 97 during the US trading hours following hawkish comment from New York Fed President Williams, who argued that further gradual rate hikes were appropriate given the underlying economic strength of the US.
The XAU/USD pair extended its rally for the second straight day on Tuesday and reached its highest level since late October at $1241.80 but lost its momentum before coming back to retest the $1234 level as expected. The Momentum is retreating from the overbought area. We are focusing today on more downside potential with the $1230.74 level being our top level to watch.
Support: 1230.74 / 1228.26
Resistance: 1236 / 1237.8