Gold Price Forecast: $1677-76, or multi-month lows is the next relevant target for XAU/USD bears

• A combination of factors dragged gold to over two-week lows on Tuesday.
• The upbeat US economic outlook continued underpinning the greenback.
• Rising US bond yields added to the selling bias surrounding the commodity.

Gold added to the previous day's losses and lost some additional ground for the second consecutive session on Tuesday. The momentum dragged the commodity to its lowest level in more than two weeks and was sponsored by a combination of factors. The prospects for a relatively faster US economic recovery from the pandemic continued underpinning the US dollar. This, in turn, was seen as a key factor weighing on the dollar-denominated commodity.

Investors remained optimistic about the outlook for the US economy amid the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package. Further fueling the expectations were the US President Joe Biden's ambitious pledge of administering 200 million vaccine shots in 100 days and hopes for an additional $3.0 trillion to $4 trillion infrastructure spending plan from the Biden Administration.

The reflation trade has raised doubts that the Fed would retain ultra-low interest rates for a longer period. This, along with a fresh leg up in the US Treasury bond yields, further collaborated to drive flows away from the non-yielding yellow metal. Apart from this, a generally positive mood around the equity markets exerted some additional pressure and dragged the safe-haven XAU/USD back closer to the $1700 mark.

Market participants now look forward to the US economic docket, highlighting the release of the Conference Board's Consumer Confidence Index. The data might influence the USD price dynamics and provide some impetus to the metal. Traders will further take cues from the US bond yields and the broader market risk sentiment. The key focus, however, will remain on Friday's release of the closely-watched US monthly jobs report (NFP).

Short-term technical outlook

From a technical perspective, the overnight slide confirmed a near-term bearish breakdown through a two-week-old trading range and might have already set the stage for further losses. Some follow-through selling below the $1700 mark will reaffirm the negative outlook and turn the commodity vulnerable to accelerate the fall back towards challenging multi-month lows, around the $1677-76 region touched earlier this month.

On the flip side, the trading range support breakpoint, around the $1720 region, now seems to act as immediate strong resistance. Any further recovery move will now be seen as a selling opportunity and remain capped near the $1732-33 supply zone. That said, a sustained move beyond might trigger a short-covering move and push the metal back towards challenging the $1745-47 strong horizontal resistance.