Gold Price Analysis: XAU/USD fails to hold above $1,900 despite falling bond yields
|- Gold fell into the negative territory during the American session.
- USD stays resilient despite slumping Treasury bond yields.
- Key technical levels remain intact as XAU/USD struggles to find direction.
The XAU/USD pair closed the first day of the week in the positive territory and continued to push higher during the first half of the day on Tuesday. After touching a daily high of $1.903, however, the pair lost its traction and dropped all the way to $1,883 before going into a consolidation phase. As of writing, gold was losing 0.37% on a daily basis at $1,892.
Earlier in the day, the sharp decline witnessed in the US Treasury bond yields allowed gold to preserve its bullish momentum. Nevertheless, the cautious market mood helped the greenback stay resilient against its rivals on Tuesday and forced XAU/USD to reverse its direction. At the moment, the benchmark 10-year US T-bond yield is down more than 2% on the day at 1.53% but the US Dollar Index clings to modest gains at 90.12.
The data from the US revealed on Tuesday that the goods and services deficit declined by $6.1 billion to $68.9 billion in April. Additionally, the NFIB Business Optimism Index edged lower to 99.6 in May from 99.8 in April and the JOLTS Job Openings registered a new series high of 9.3 million April, compared to analysts' estimate of 8.3 million. These figures failed to trigger a noticeable market reaction.
Meanwhile, Wall Street's main indexes, which opened in the positive territory, are moving sideways near Monday's closing levels, reflecting a cautious market mood ahead of Thursday's Consumer Price Index (CPI) data.
Gold technical outlook
Following Tuesday's fluctuations, key technical remains for gold remain intact. On the upside, sellers continue to defend $1,900 (psychological level). Above that hurdle, the next resistance is located at $1,916 (June 1 high). Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart is moving sideways near 60, suggesting that the pair is having a difficult time gathering directional momentum.
On the downside, the 20-day SMA, which is currently located at $1,880, continues to act as a dynamic support. A daily close below that level could allow gold to retest the ascending trend line coming from early April at $1,870. before the critical 200-day SMA at $1,840.
Additional levels to watch for
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