- Gold Price grinds higher after refreshing weekly low, snaps two-day downtrend.
- US dollar strength probes gold buyers, downbeat Treasury yields portray recession risks and weigh on prices too.
- Central bankers’ comments at the ECB Forum will be crucial for fresh impulse.
Gold Price (XAU/USD) pares weekly losses around $1,822 as an escalation in the recession risks propels the metal’s safe-haven demand heading into Wednesday’s European session. However, a firmer US dollar and anxiety ahead of the key data/event appear to test the quote’s upside momentum of late.
Reuters’ news that the European Central Bank (ECB) teases plans to announce details of a bond-buying scheme magnifies the market’s cautious mood. However, ECB Chief Economist Philip Lane sees a double-sided risk of spiraling inflation and an economic slowdown, per CNBC.
It’s worth noting that the latest weakness in the macro data joins inflation fears and geopolitical tussles surrounding Russia and China to also amplify the risk of economic slowdown.
Additionally, the risk reversal (RR) for gold stays down for third consecutive week to -0.125 versus -0.350 the last. The daily RR, the difference between the call and the puts, also drops the most in a week to -0.135 at the latest.
The US dollar, however, appears cautious in cheering the risk-off mood as the Fed policymakers have been trying not to repeat the latest rate hike trajectory in the next moves. Even so, the jump in the US one-year retail inflation expectations allows the US Dollar Index (DXY) to refresh its weekly top near 104.60 of late.
Amid these plays, stock futures print mild gains but the US 10-year Treasury yields dropped the most in a week during the second negative day.
That said, the gold traders should keep their eyes on the monetary policy discussions among the central bankers from the US, the UK and the European Union (EU) at the ECB Forum seems for fresh impulse. Ahead of that, the US Core Personal Consumption Expenditure (PCE) for Q1 2022, expected to remain unchanged at 5.1%, could entertain traders.
Technical analysis
Gold portrays multiple failures to cross the 23.6% Fibonacci retracement (Fibo.) of June 12-14 downside, which in turn joins the recently steady RSI (14) to suggest the metal’s further downside.
That said, the latest bottom surrounding $1,818 may offer immediate support before directing the quote towards the two-week-old bearish channel’s bottom line, near $1,809. Following that, the $1,800 threshold and the monthly low of $1,805 could test the bears before directing them to the yearly trough close to $1,786.
Alternatively, a clear upside break of the aforementioned Fibo. hurdle near $1,823 could extend the corrective pullback towards the 50-HMA and the 200-HMA levels, respectively around $1,825 and $1,832.
However, the XAU/USD bears remain hopeful until the prices remain below the stated channel’s resistance line, at $1,835 by the press time.
Gold: Hourly chart
Trend: Further weakness expected
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