Gold Price Forecast: XAU/USD's reversal from the $3,500 area holds at $3,470

• Gold retreated from fresh record highs beyond $3.500 but remains steady above $3,470.
• The US Dollar appreciates amid higher US yields and a risk-averse market.
• XAU/USD is correcting lower after a six-day rally.

Gold is trading higher for the sixth consecutive day on Tuesday, but the precious metal found sellers at all-time highs right above the $3,500 level, and has given away most of the daily gains, weighed by a strong US Dollar recovery.

The US Dollar Index, which measures the value of the Greenback against the world's most-traded currencies, appreciates nearly 0.7% on the day. The US Dollar retraces the previous five trading days' reversal, fuelled by risk aversion and a sharp recovery of US yields, with all eyes on the US manufacturing PMI release.

Technical analysis: Gold is correcting from overbought levels

What goes up must come down at some point, and Bullion's rally was looking overstretched. The XAU/USD pair had reached overbought levels in practically all time frames after rallying beyond 4% over the last six days and is now correcting lower.

The 4-hour chart shows the Relative Strength Index (RSI) still at the 70 level, which suggests the possibility of a further correction. Immediate support is now at the $3,470 intra-day low ahead of the previous peaks, at $3,450 (July 16 high) and $3435 (Monday's low and July 23 high).

To the Upside, bulls have a significant challenge at the $3,500 psychological level, where Gold peaked earlier today and on April 22. Further up, the 161.8% retracement of today's pullback is at $3,530, the 262,8% retracement of that move is coincident with the 262.8% retracement of the early August pullback, at the $3565-$3.570 area.