Gold Price Analysis: XAUUSD hangs near two-week low, around $1,830 area amid stronger USD

• Gold edged lower for the second straight day and dropped to a nearly two-week low on Wednesday.
• Rising US bond yields continued lending support to the USD and drove flows away from the XAUUSD.
• The worsening global economic outlook could help limit deeper losses for the safe-haven commodity.

Gold witnessed some selling for the second successive day and dropped to a near two-week low, around the $1,830-$1,829 region during the early part of trading on Wednesday. The US dollar built on the previous day's solid rebound from over a one-month low and gained some follow-through traction amid rising US Treasury bond yields. This, in turn, was seen as a key factor that undermined demand for the dollar-denominated commodity.

Speaking at an event in Frankfurt on Monday, Fed Governor Christopher Waller backed a 50 bps rate hike for several meetings until inflation eases back toward the central bank’s goal. This, in turn, pushed the yield on the benchmark 10-year US government bond to a nearly two-week high, which continued acting as a tailwind for the USD and contributed to driving flows away from the non-yielding gold. Apart from this, the downfall could further be attributed to some technical selling following the overnight beak below the very important 200-day SMA.

That said, the worsening global economic outlook offered some support to the safe-haven gold. Investors remain worried that central banks can hike interest rates to curb inflation without impacting economic growth. The XAUUSD, which is often seen as a hedge against inflation, could further benefit from concerns that the global supply chain disruption would push consumer prices even higher. This, in turn, warrants some caution for aggressive bearish traders and before positioning for any further depreciating move for the metal.

Market participants now look forward to the US economic docket, featuring the ISM manufacturing PMI and JOLTS Job Openings later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide a fresh impetus to gold. Apart from this, traders will take cues from the broader market risk sentiment to grab short-term opportunities. The focus, however, would remain on the closely watched US monthly jobs report, popularly known as NFP, scheduled for release on Friday.

Technical levels to watch