- Gold Price turns negative for the first time in six trading days.
- The USD attempts a bounce, Treasury yields stabilize ahead of Fed minutes.
- XAUUSD closed Tuesday above 21-DMA, what’s next?
The buying momentum around Gold Price extended on Tuesday, as bulls cinched fresh two-week highs at $1870. In doing so, the bright metal gained for the fifth straight trading day, continuing its recovery from four-month troughs of $1787. As I noted earlier this week, the inverse relationship between the US Treasury yields and gold price is playing out well, with Tuesday’s drop in the yields having strengthened the recovery momentum in the non-yielding precious metal.
The bets for aggressive Fed tightening have cooled off amid fears of hard-landing, especially after Atlanta Fed President Raphael Bostic warned that headlong rate hikes could create "significant economic dislocation.” Additionally, comments from Fed Chair Jerome Powell also weighed on the US rates. Powell said ‘Soft’ economic landing may be out of US Fed’s control while speaking in an interview on the American Public Media programme Marketplace. The US dollar tumbled alongside the yields, extending its downward correction despite a cautious market mood, led by a tech sell-off on the global markets. Weak US Manufacturing PMI for May also added to the dollar’s misery, benefiting XAUUSD.
Heading into Fed’s May meeting minutes release, gold bulls are taking a breather while the dollar attempts a bounce, despite risk being in a better spot. The US Treasury yields stabilize, as markets reposition ahead of the critical events, the Durable Goods data and the FOMC minutes. Wednesday's publication of minutes from the Fed's May meeting could show the reluctance of the Fed policymakers for further rate hikes at the September meeting. Also, the Fed members’ discussion around quantitative tightening will be closely eyed. In the meantime, the profit-booking decline in gold price could extend, as the metal’s daily chart points to a brief technical correction before the next uptrend kicks in.
Gold Price Chart: Daily chart
Gold Price has finally yielded a daily closing above the critical 21-Daily Moving Average (DMA) hurdle at $1,855. So, what’s next?
After the relentless surge, gold bulls could see a minor pullback from two-week highs, with the immediate support of the 21-DMA likely to be tested.
A sustained break below the last could expose the next downside target of $1,850, below which the mildly bullish 200-DMA at $1,839 will challenge the bullish traders.
The 14-day Relative Strength Index (RSI) has turned south just below the midline, justifying the retreat in the price of gold.
On the flip side, if the Fed minutes downplay aggressive rate hike expectations, providing a cautious take amidst hard-landing fears, then the metal could resume its recent uptrend towards the horizontal 100-DMA at $1,886.
The next relevant hurdle aligns at the $1,900 threshold.
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 breaks below 1.1000 on stellar NFP
The buying bias in the Greenback gathers extra pace on Friday after the US economy created far more jobs than initially estimated in September, dragging EUR/USD to the area of new lows near 1.0950.
GBP/USD breaches 1.3100 after encouraging US Payrolls
The continuation of the uptrend in the US Dollar motivates GBP/USD to accelerates its losses and breaches 1.3100 the figure in the wake of the release of US NFP.
Gold rebounds from daily lows and flirts with $2,670
Following a post-NFP dip to the $2,640 region, Gold prices now embarks on an acceptable rebound and retest the area of $2,670 per ounce troy despite the marked advance in the US Dollar and rising US yields across the board.
US Payrolls surge in September, as 50bp rate cut ruled out
US payrolls data surprised on the upside in September, rising by 254k, smashing expectations of a 150k rise. The unemployment rate fell to 4.1% from 4.2%, average hourly earnings increased to a 4% YoY rate and there was a 72k upwards revision to the previous two months’ payrolls numbers.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.