Gold edges lower for second day as dollar rebound constrains gains

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Gold prices inched lower on Tuesday while silver traded higher as precious metals prices continued to consolidate after falling dramatically so far this year.

Price action
What analysts are saying
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Gold pulled back as the US dollar has retaken some of the ground it lost last week. The ICE US Dollar Index DXY,
+0.50%
was up 0.6% at 107.10 in recent trade.

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According to Jeffrey Halley, a senior market analyst at OANDA, the technical setup underpinning the gold market doesn’t look very encouraging.

“Gold needs to overcome heavy resistance at the $1,745.00 an ounce triple top before the gold bugs can really start to get excited. It has support at $1,680.00, and then the longer-term support around $1,675.00 an ounce zone,” Halley wrote in a note sent to MarketWatch Tuesday morning.

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For now, the precious metal is likely to “remain on standby until the Federal Reserve interest rate decision Wednesday, said Lukman Otunuga, manager, market analysis at FXTM, in a market update, adding that gold has barely moved since Monday “due to the absence of a fresh directional catalyst.”

It will be interesting to “see how gold reacts when the Fed moves ahead with a 75-basis rate hike,” he said. “Will the precious metal weaken due to its zero-yielding status? Or will a weaker dollar limit downside losses?”

The $1,700 level “remains a key point of interest this week and a level that can determine whether gold rebounds or extends the decline,” said Otunuga.

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Credit: www.marketwatch.com /

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