• Gold loses momentum after a sharp rally and trims gains.
• Yellow metal up for the third consecutive day, but off highs.
• Key data ahead: US inflation on Tuesday.

Gold is rising on Tuesday for the third consecutive day although it trimmed gains during the last hour, creating doubts about the sustainability of the current rally. The price peaked at $1969.70, the highest since March 14 and then dropped to as low as $1945.60. As of writing, it is hovering around $1952, up six dollars from Friday’s close.

Volatility in metals jumped on Monday. Silver also trimmed losses. XAG/USD peaked earlier at 25.37 and is back below 25.00.

 The correction from the new top in gold took place probably amid some profit-taking and as US yields moved further to the upside. The US 30-year yield stands at 2.81%, the highest since May 2019. Sharp moves to the upside in XAU/USD are likely to remain unstable or vulnerable to relevant corrections, while the trend in US yields is positive.

Also, a stronger US dollar contributed to gold’s pullback. The DXY is back above 100.00, up 0.20%, on it way to the highest daily close since May 2020. US stocks are down, with the Dow Jones falling 0.51% and the Nasdaq losing 1.75%.

The short-term bias in gold is positive, not as strong as it was hours ago. A daily close above $1960 should reinforce the bullish outlook. On the contrary, a decline under $1943, would expose the 20-day Simple Moving Average at $1932. The critical support is the $1915 zone.

Technical levels