- Gold price faces rejection just shy of $2,000, extending correction early Monday.
- US Dollar tracks US Treasury bond yields higher; finds support from a cautious mood.
- Upside risks remain intact for Gold price amid bullish RSI and geopolitical tensions.
Gold price is consolidating its correction from five-month lows, keeping the red near $1,975 early Monday. Gold price fell for the first time in four trading days, although the downside remains cushioned amid lingering Middle East tensions and a busy United States (US) economic calendar this week.
Focus remains on US Treasury yields and Middle East tensions
Despite some conciliatory news from the Middle East geopolitical front over the weekend, investors trading with caution as risks of a flare-up still persist. Over the weekend, Hamas released two US hostages and aid entered through Egypt’s border with Gaza. Amidst signs of a potential thaw, Gold price extended its correction, having reached the highest level in five months at $1,997 on Friday. A renewed upswing in the US Treasury bond yields also corroborated the pullback in Gold price.
However, news that Israel stepped up air raids on Gaza in preparation for the “next phase” of its conflict with Hamas while warning that Hezbollah risks dragging Lebanon into a wider regional war continues to keep the tensions alive. Geopolitical risks remain supportive of the safe-haven United States Dollar (USD) at the expense of Gold price.
The US Treasury bond yields resume its uptrend, as the bond market rout returns at the start of the week. The supply-demand mismatch for the US Treasuries, amid a budget deficit and looming risks of a government shutdown, keeps pushing the US Treasury bond yields through the roof. The benchmark 10-year US Treasury bond yields are approaching the 5.0% key level once again, checking the upside attempts in the non-interest-bearing Gold price.
Markets also remain cautious, bracing for the US growth and inflation data,, as well as earnings from some of the world's largest tech companies due later this week. The top-tier US economic data could have a strong implication on the US Federal Reserve’s (Fed) interest rates outlook in the coming months, eventually influencing the US Dollar and Gold price dynamics.
In the meantime, the Middle East conflict will be closely eyed, in the absence of any speeches from Fed policymakers, as the US central bank has entered a ‘blackout period’ before next week’s policy meeting.
Gold price technical analysis: Daily chart
Gold price remains a ‘buy-the-dip’ trade, as the 14-day Relative Strength Index (RSI) indicator has eased off from the overbought region to now trade in the bullish zone, keeping the door open for a fresh upswing.
The initial supply zone will be met at $1,988 (July 20 high), above which the five-month highs of $1,997 will be retested. The $2,000 threshold will be a tough nut to crack for Gold buyers.
On the flip side, further retracement from multi-month highs could need a sustained move below the intraday low of $1,963.
The $1,950 psychological level will be the next support in sight for Gold buyers. The last line of defense for them will be the October 19 low of $1,945.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.