USD Uptick Weighs Pre-NY

Gold is on the defensive after yesterday’s U.S. real yield rally, with the broader USD (BBDXY) showing a little further through yesterday’s high in recent trade, applying some fresh pressure.

• The unwind of geopolitical risk premium has dented gold in recent sessions, with the stabilisation of the greenback, a poorly-received round of 30-Year Tsy supply and the latest round of comments from Fed Chair Powell also weighing.
• Spot hovers a handful of dollars above this week’s low, last printing -$10/oz at $1,948/oz.
• Technically, the latest pullback appears to be a correction - for now - and the trend condition remains bullish. Moving average studies are in a bull-mode set-up, highlighting a rising trend. A resumption of gains would open $2,022.20/oz next, the May 15 high. Initial firm pivot support lies at $1,938.1/oz, the 50-day EMA. Clearance of this level is required to signal a short-term top and the potential for a deeper retracement.
• On the demand side, known ETF holdings of bullion have stabilised a little above cycle lows registered in mid-October, while wider focus remains on the likelihood of ongoing central bank demand.
• Also note that Citi have flagged that “today is Dhanteras, the first day of the Diwali festival, which typically marks the single-largest day of gold buying” associated with the festival.