Gold prices resumed the advance after two days of losses as the dollar weakened Tuesday following upbeat economic data from China.
At the time of writing, the spot price XAU/USD is trading at the $2,005 area, recording a 0.47% daily gain, having bounced from a low of $1,991 an ounce.
The U.S. bond market stabilized on Tuesday, leaving room for the yellow metal to appreciate modestly. The 10-year note yield fell to 3.57%, while the 2-year rate remained at 4.20%. At the same time, Wall Street managed to reverse early losses, with indexes trading flat by the end of the session.
Federal Reserve Bank of St. Louis President, James Bullard, discounted recession odds and favored more rate hikes to counter persistent inflationary pressures. Still, the dollar failed to benefit from these comments.
According to the WIRP tool, investors are betting on probabilities of nearly 90% of a 25 basis point rate increase by the Federal Reserve in May but higher chances of a no-hike in the June meeting. Increasing expectations that the Fed might pause its tightening cycle and start cutting rates by the end of the year have pressured the greenback over the last weeks, which has taken gold to near-record-high price levels.
XAUUSD Daily Chart
From a technical perspective, the XAU/USD pair maintains the bullish bias according to indicators on the daily chart while the price hovers above its main moving averages.
The 20-day SMA offers immediate support in the $1,990 area, followed by the $1,970 zone. On the flip side, if the price overcomes last week’s highs at around $2,050, it would target historic highs in the $2,070-75 region.