Image Source: Pixabay

Gold prices are back on the defensive these days as the pressure reemerged after a short-lived consolidation. The metal encountered local resistance at around $1,870 last week and has been mostly struggling since then. However, the prices regained a bullish bias in recent trading, targeting the $1,850 zone again. 

Now that the US dollar switched into recovery mode, the bullion looks set to extend the decline in the short term. The greenback continues to derive support from higher yields and persistent concerns over the Fed’s aggressive tightening path, pressuring the non-yielding metal in the process.

The XAUUSD pair was challenging the $1,830 zone earlier on Wednesday before turning positive ahead of the North American trading. The technical picture has deteriorated since yesterday’s break below $1,850. Should the bullion fail to cling onto gains, a daily close under $1,830 would add to the bearish pressure and could pave the way towards the $1,800 figure eventually. Also, the yellow metal is yet to confIrm to recovery above the 20- and 200-DMAs. 

The latest ascent in the dollar was due to fresh hawkish remarks from the Fed officials. This time, Christopher Waller backed a 50 bps rate hike for several meetings “until inflation eases back toward the central bank’s goal.” Still, the USD index lacks the momentum to overcome the 102.00 figure that continues to cap gains for the second session in a row. 

Now, the market focus is shifting gradually towards the US NFP employment report due on Friday. Should the figures exceed expectations, the buck may rally ahead of the weekend, thus pressuring gold prices further. Depending on the magnitude of the dollar’s potential ascent, the metal could derail the $1,800 figure for the first time since mid-May.