Gold takes advantage of USD weakness, advances to daily highs above $1285
- US Dollar Index extends decline below the 98 mark.
- Market sentiment remains neutral ahead of this week's key events.
- Coming up: CB Consumer Confidence Index and pending home sales data from the U.S.
The XAU/USD pair dropped to $1280 area on Monday as rising US Treasury bond yields made it difficult for the safe-haven precious metal to find demand. However, with the greenback coming under a renewed pressure on Tuesday, the pair erased yesterday's losses and was last seen trading at $1284.90, adding 0.45% on a daily basis.
Ahead of this week's highly-anticipated FOMC meeting, the US Dollar Index continues to correct last week's impressive rally. While investors are waiting for the Conference Board's Consumer Confidence Index and pending home sales data, the index is losing 0.27% on the day at 97.60.
Previewing Wednesday's Fed event, TD Securities analysts argued that the dollar was unlikely to come under a significant selling pressure even if Chairman Powell sounds more dovish than expected as markets had already priced that "sense of dovishness."
Meanwhile, the 10-year T-bond yield today is posting small losses, pointing out to a neutral market sentiment that helps gold preserve its strength against the buck. In the second half of the day, investors will be paying close attention to Wall Street's performance as well.
Technical levels to consider