Gold built on the previous day's goodish rebound from the $1,786 region, or its lowest level since late January and edged higher for the second successive day on Tuesday. The XAUUSD held on to its modest intraday gains through the first half of the European session and was last seen hovering near the $1,830 region, up around 0.25% for the day.
The ongoing US dollar retracement slide from a two-decade high touched last Friday turned out to be a key factor that extended some support to the dollar-denominated gold. That said, a combination of factors held back bulls from placing aggressive bets and kept a lid on any meaningful upside for spot prices, at least for the time being.
The markets seem convinced that the Fed would need to take more drastic action to bring inflation under control and have fully priced in at least a 50 bps rate hike at the next two policy meetings. This, along with the risk-on impulse, led to a fresh leg up in the US Treasury bond yields, which, in turn, should act as a headwind for the safe-haven gold.
Hence, the focus will remain glued to Fed Chair Jerome Powell's speech later this Thursday. Investors will look for clues about the possibility of a jumbo 75 bps rate hike in June, which will play a key role in driving the USD demand in the near term. This, in turn, would determine the next leg of a directional move for the non-yielding gold.
In the meantime, traders will take cues from the release of the US monthly Retail Sales figures during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to gold. Apart from this, the broader market risk sentiment will also be looked upon for short-term trading opportunities.
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