- Gold picks up bids to intraday high to welcomes European session.
- US Treasury yields retreat, DXY struggles ahead of the Fed’s preferred inflation gauge of inflation.
- Market sentiment stays upbeat on US stimulus, trade headlines.
- Gold Weekly Forecast: XAU/USD poised to extend slide after breaking key supports
Update: Gold is picking up the bid tone in European trading, taking advantage of the retreat in the US Treasury yield and the dollar across the curve. The risk-off action in the European equities, amid rising concerns over the rapid spread of the Delta plus covid strain, lifts gold’s safe-haven appeal. At the time of writing, gold price is advancing 0.45% on the day to trade at $1784, poised for the first weekly gain in four. Despite the rebound, gold’s upside appears capped around $1794 ahead of the US PCE Inflation data, which shed more light on the inflation picture and the Fed’s next policy move.
Read: Gold Price Forecast: XAU/USD not out of the woods yet, focus on US PCE inflation
Gold (XAU/USD) stays on the front foot, picks up bids to $1,780, as market players brace for Friday’s European session. In doing so, the yellow metal cheers the US dollar weakness, up 0.30% intraday and snapping the three-week downtrend, ahead of the key inflation figures.
While the pre-data cautious sentiment could be spotted behind the greenback’s downbeat performance, the risk-on mood also cuts the USD’s safe-haven demand and adds gains to the gold prices. That said, the US dollar index (DXY), a gauge of the US currency versus the major six counterparts, snaps a two-day run-up with 0.05% downside near 91.77 by the press time.
Among the key risk catalysts, US stimulus and trade headlines were the major favor to the market sentiment. US President Joe Biden’s ability to deliver promised stimulus and optimism concerning the US-EU trade relations, per German Trade Minister Peter Altmaier, keep gold buyers hopeful.
On the contrary, Australia’s local lockdowns and the EU’s rejection to have a summit with Russian leader Vladimir Putin, coupled with the Fed’s recalling of the pandemic-led relief measures for the large banks, test the market sentiment and gold. Furthermore, fears of the Delta variant of the coronavirus (COVID-19) become an extra challenge to the risk-on mood but get fewer accolades.
Against this backdrop, stock futures are mildly bid and the US 10-year Treasury yields also retreat by the press time. The same favor gold prices due to its risk-barometer status.
Looking forward, May’s monthly reading of the Personal Consumption Expenditure (PCE) inflation figures becomes the key for today. Also important will be how the Fed policymakers react to the inflation fears. Forecasts suggest confirmation of the Fed’s last week’s hawkish tilt, which in turn may test the gold bulls. However, softer inflation figures will propel the upbeat Fedspeak and buoy risk appetite, also helping the gold prices to keep the recovery moves.
Technical analysis: Bulls roll-up sleeves
Gold prices battle a two-week-old falling resistance line after bouncing off short-term key horizontal support.
In addition to the sustained bounce off two-month-old important support, bullish MACD signals and upward sloping MACD lines also keep the gold buyers hopeful.
However, a clear upside break of $1,781 becomes necessary for the bulls to refresh the weekly top with $1,797. Following that, May 13 low near $1,809 and the early May tops surrounding $1,845 could test the commodity’s upside moves.
Though, gold bears remain hopeful until the quote stays below the 200-SMA level of $1,859.
Meanwhile, a downside break of $1,7960 won’t be a big favor for gold sellers as they need to break the $1,756 support, comprising March top and late April low, to aim for multiple supports near $1,720.
Overall, gold is up for a fresh rise but bulls await a clear break of immediate hurdles.
Gold: Four-hour chart
Trend: Further upside expected
Also read…
Gold sell opportunity is at 1795/1800
Gold Price Forecast: XAU/USD not out of the woods yet, focus on US PCE inflation
Gold Futures: Further rangebound on the cards
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
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.