- Gold price is back in the red, testing the critical 100-Daily Moving Average support at $1,934.
- The US Dollar pulls back, along with US Treasury bond yields, on debt-deal optimism.
- Gold price remains vulnerable amid rising odds of a June Fed rate hike and an impending Bear Cross.
Gold price is resuming its downtrend after a brief pullback on Friday, kicking off the week on the wrong footing. The United States Dollar (USD) is retreating from two-month tops along with US Treasury bond yields as investors cheer the US debt deal reached on Sunday.
United States averts a default
Risk sentiment remains in a firmer spot at the start of the week. US S&P 500 futures gain 0.25% as markets breathe a sigh of relief, courtesy of a weekend deal reached by US President Joe Biden and House Speaker Kevin McCarthy to suspend the government's $31.4 trillion debt ceiling until 2025, averting an economic catastrophe.
Amidst this optimism, the US Dollar is staging a minor correction from two-month highs against its major counterparts, tracking the sluggish performance in US Treasury bond yields. Despite the renewed weakness in the Greenback, Gold price looks vulnerable as markets ward off risks of a potential US recession even though the debt deal still needs to get passed via a narrowly-divided Congress.
The latest downtick in the Gold price could also be attributed to rising expectations that the US Federal Reserve (Fed) will deliver a 25 basis points (bps) rate hike in June. Markets are currently pricing in a 62% probability of a 25 bps rate hike next month, compared with odds of about 12% seen a week ago. Strong United States economic data, coupled with the US debt-ceiling extension, could offer the Fed some leeway to continue its tightening cycle one last time in June.
Data released Friday showed that the headline Personal Consumption Expenditure (PCE) Price Index rose 0.4% MoM in April, pushing the annual rate to 4.4% from 4.2% previously. The Core PCE, the Federal Reserve’s favorite inflation gauge, advanced 0.4% monthly and 4.7% on a yearly basis. Meanwhile, the United States GDP increased at an annualized rate of 1.3% in the first quarter, an increase from the first reading of 1.1% and above economists' estimates of 1.1%.
In the day ahead, the broader market sentiment will remain the key driver as most of the major European markets and the US markets are closed this Monday. Investors will take cues from the central banks’ expectations ahead of Wednesday’s Congressional vote and Friday’s United States Nonfarm Payrolls data.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price is challenging the bullish commitments once again at the ascending 100-daily moving average (DMA) at $1,934, having defended that key support on a weekly closing basis.
The 14-day Relative Strength Index (RSI) is pointing lower below the midline, justifying the vulnerability in Gold price. Adding credence to the bearish bias, the 21 DMA is set to pierce the 50 DMA from above, which will confirm a Bear Cross once it occurs.
Gold bears aim for the March 17 low at $1,918 on a sustained break below the 100 DMA cap. Further down, the $1,900 round figure could come into play.
Alternatively, immediate resistance is seen at the $1,950 psychological level, above which bulls will look to retest Friday’s high at $1,957.
The $1,970 static resistance could make it an uphill task for Gold buyers on their road to recovery.
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 trades with negative bias, holds above 1.0700 as traders await US PCE Price Index
EUR/USD edges lower during the Asian session on Friday and moves away from a two-week high, around the 1.0740 area touched the previous day. Spot prices trade around the 1.0725-1.0720 region and remain at the mercy of the US Dollar price dynamics ahead of the crucial US data.
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.