Steady After The Largest 1-Day Gain Since May

Gold has steadied in the Asia-Pac session, after closing 1.5% higher on Monday, the largest gain since May, as the conflict in the Middle East drove haven demand.

• The surge in precious metal prices can also be attributed to an emerging change in the sentiment regarding the Federal Reserve's policy outlook. There is a growing consensus among US policymakers that the recent spike in US Treasury yields, which reversed course on Monday, could potentially serve as an alternative to implementing further hikes in the Fed funds rate. It's worth noting that higher interest rates typically have a negative impact on gold, which doesn't yield interest.
• On Monday, Fed Vice Chair Jefferson said, “I am particularly attentive to upside risks to inflation, such as those associated with the economy and labour market remaining too strong to achieve further disinflation, as well as risks associated with unexpected increases in energy prices.”
• According MNI’s technicals team, the bearish theme in gold remains intact despite recent strength. The recent sell-off resulted in a break of support at $1901.1 and this was followed by a breach of $1884.9, the Aug 21 low. This confirmed a resumption of the downtrend that started in early May. The focus is on $1804.9, the Feb 28 low and a key support. On the upside, firm resistance is at $1878.2, the 20-day EMA.