- Gold price struggles to keep the early Asian session pullback from five-week high, picks up bids of late.
- Interest rate futures suggest Fed policy pivot in March, versus the last week’s expectations of 50 bps rate hike.
- Corrective bounce in yields probe XAU/USD bulls ahead of US CPI for February.
Gold price (XAU/USD) remains mildly offered as traders struggle to justify mixed catalysts ahead of the key US Consumer Price Index (CPI) data during early Tuesday. That said, the XAU/USD drops 0.25% intraday to $1,909 during the first loss-making day in four heading into the European session.
The precious metal’s latest losses could be linked to the US Dollar’s corrective bounce while tracing the US Treasury bond yields. US 10-year Treasury bond yields print mild gains of around 3.58%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.19% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day.
On the other hand, the US Dollar Index (DXY) bounces off a one-month low to snap a three-day downtrend near 103.90, up 0.27% intraday at the latest.
It’s worth observing that the fears emanating from the Silicon Valley Bank (SVB) and the Signature Bank fallouts have recently reversed the hawkish expectations from the Federal Reserve (Fed) and challenged the DXY bulls of late. “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June,” said CME. On the same line Reuters mentioned that the US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause,” said Reuters. The news also added that the market last week was poised for a 50-bps increase prior to the SVB collapse.
Also likely to weigh on the Gold price could be the latest fears surrounding China and Russia as the UK, the US and Australia over the nuclear submarine issues while Washington meets Taiwan's leader. However, hopes of more investment in China and the recently increasing hopes of the dragon nation’s gradual recovery, as backed by Bloomberg, favor the XAU/USD bulls.
Moving on, the US CPI will be more important for the USD/CHF pair traders as the Fed bets have already reversed. As per the market forecasts, the headline US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.
Gold price technical analysis
The downside break of a two-day-old ascending trend channel joins a bearish MACD signal and firmer RSI to keep Gold sellers hopeful. However, the 21-bar Exponential Moving Average (EMA) restricts the immediate downside of the XAU/USD near the $1,900 threshold.
Following that, the 38.2% Fibonacci retracement level of the metal’s upside from February 28, close to $1,873, can act as a buffer before directing the Gold price towards the March 06 swing high of near $1,858.
It should be noted, however, that the 200-EMA level surrounding $1,851 could act as the last defense for the XAU/USD buyers.
Alternatively, Gold price recovery remains elusive unless the quote stays below the stated channel’s lower line, close to $1,921 at the latest.
In a case where the XAU/USD remains firmer past $1,921, the previous monthly high surrounding $1,960 could lure the bulls.
Gold price: Hourly chart
Trend: Bullish
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.