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Gold prices bounced back on Wednesday as the dollar paused its surge to 20-year peaks. The bullion lost more than two percent on Tuesday as the greenback maintained its strength on recession fears. Another factor against gold is the firm Treasury yields. The benchmark 10-year yields rose after dropping to a one-month low in the previous session.

Spot gold is currently trading at $1,766.14 per ounce as of 0852 GMT.

Tiger Brokers chief strategy officer Michael McCarthy commented that gold’s recovery is very modest following a significant decline. The bullion lost 2.6% in the previous session, dropping to $1,762.81. It was the lowest level since mid-December 2021. McCarthy also noted the twin effect of a stronger dollar on the yellow metal.

On the technical front, Reuters analyst Wang Tao predicted spot gold to test a support level at $1,756 an ounce. A close below that could send the bullion down to $1,748.

Market participants wait for the release of the minutes of the Federal Reserve’s June policy meeting. It could provide them with insights into the central bank’s interest rate roadmap.

FXStreet senior analyst Dhwani Mehta suggested that the Fed minutes could push the gold down to $1,722. Though the bullion gained some ground on Wednesday, an aggressive tightening stance of the central bank could reinvigorate the dollar.

The daily price chart shows that gold is on course to test the rising channel at $1,722. Mehta mentioned the bearish channel formation and the death cross that provide a double whammy to gold traders. In addition, the 14-day Relative Strength Index remains slightly above the oversold territory, indicating further downside potential.

The yellow metal needs to close above $1,785 to stage any meaningful recovery. Mehta sees the next resistance at $1,800. On the downside, she sees immediate support at $1,750 and then $1,722.

Meanwhile, more G10 central banks raised interest rates in June. Seven of them implemented a total of 350 basis points (bps) rate hikes last month. The U.S. Federal Reserve lifted rates by 75 bps. It was the Fed’s biggest increase since 1994. Switzerland matched the moves by Australia, Canada, Norway, and Sweden with a 50 bps hike.

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