Gold prices failed to extend the upside move yesterday and continue to struggle on Tuesday, with the bullion holds below the $1,420 area for a third day in a row. USD demand has picked up slightly after a negative start of the week, which caps the upside potential in prices.
Markets are still focused on the upcoming rate cut by the Federal Reserve and expectations of easing monetary policy in the US help the precious metal to hold above $1,400. In this context, traders will closely monitor further incoming US economic data. Today, the US retail sales report could affect USD dynamics and thus push gold prices in either direction. Strong figures will ease concerns over a more aggressive easing and may give the additional lift to the greenback.
In this scenario, the bullion will remain under the local pressure and could get closer to the $1,400 handle. On the upside, the yellow metal needs to see a decisive break above $1,420 in order to challenge last week’s highs around $1,427. In the short-term, risks are skewed to the downside.