- Gold Price gave up Monday's gains as the market's sentiment improved.
- US 10-year Treasury yields renew three-year high amid aggressive US Fed officials.
- Might we see a minimal job loss recession? Why not?
Gold Price trades near a daily low of $1,910.64, pressured by the upbeat tone of Wall Street, regardless of a solid reason for such optimism. Inflation-related concerns retook centre stage following comments from US Federal Reserve chief Jerome Powell, who said that “inflation is much too high,” and that he is ready to hike rates by 50 bps if needed to curb inflation. As a result, government bond yields soared to fresh multi-year highs.
But the US is not the only one suffering from prices pressure. Heating inflation is also a concern in Europe, exacerbated by the Ukraine-Russia crisis leading to soaring energy prices. Last but not least, a new wave of coronavirus is hitting Europe, with cases sharply up from a week ago. The current Wall Street momentum is keeping XAUUSD buyers sidelined, but that could quickly change at the sightless sign. The war and inflation are poised to be the main market drivers for some time now.
On the war front, Moscow said that talks with Ukraine are ongoing but claimed they should be more active and substantive. Kyiv, on the other hand, said it would discuss the Crimea and Donbass situation after a ceasefire.
Also read: Gold Price Forecast: XAUUSD bulls to face an uphill battle amid hawkish Fed, Ukraine saga
US 10-year Treasury yields have risen to a fresh high since May 2019 of 2.375% as the market’s fears of inflation magnified, pushing the Fed policymakers towards more aggressive monetary policies going forward.
On Monday, Atlanta Fed President Bostic and Richmond Fed’s Barkin promoted the US central bank’s ability to restrain inflation by indirectly signaling a faster pace of the rate hike. However, the comments from Fed Chair Jerome Powell who said, “The Fed will raise rates by more than 25bps at a meeting or meetings if necessary,” offered a major upside momentum to the T-bond coupons.
“Sharp moves in the US Treasury market are increasingly pointing to the risk of an approaching recession, with "bond vigilantes coming out of the woodwork" and markets doubting the U.S. Federal Reserve's plan to engineer a "soft landing" for the economy as it hikes interest rates to fight inflation, market experts said,” mentioned Reuters. On the same line were comments from International Monetary Fund’s (IMF) Asia-Pacific Director Changyong Rhee, who said, “The US has the room to raise interest rates.” IMF’s Rhee also mentioned that Asia’s inflation would peak in Q2 of this year.
Gold Price technical analysis
XAUUSD has broken below the Fibonacci retracement of its 2022 rally at $1,925.20, now an immediate resistance level. The daily 20 SMA keeps providing dynamic resistance, now at $1,946, while technical indicators in the daily chart are stuck around their midlines, lacking clear directional strength. Gold Price is quickly approaching the $1,900 threshold, and a break below the latter exposes the weekly low at $1,985. The 61.8% retracement of the aforementioned rally comes at $1,890 a critical support level, as a break below it could mean a steeper sell-off.
Still, and given persistent tensions in Eastern Europe, the bearish potential remains limited. The ongoing optimism does not have enough support to be more than temporal and will likely fade unless the crisis suddenly ends. Gold buyers will be looking to renew their longs at lower levels, close to the next Fibonacci support.
|Today last price||1914.06|
|Today Daily Change||-21.85|
|Today Daily Change %||-1.13|
|Today daily open||1935.91|
|Previous Daily High||1940.68|
|Previous Daily Low||1918.15|
|Previous Weekly High||1990.22|
|Previous Weekly Low||1895.15|
|Previous Monthly High||1974.51|
|Previous Monthly Low||1788.67|
|Daily Fibonacci 38.2%||1932.07|
|Daily Fibonacci 61.8%||1926.76|
|Daily Pivot Point S1||1922.48|
|Daily Pivot Point S2||1909.05|
|Daily Pivot Point S3||1899.95|
|Daily Pivot Point R1||1945.01|
|Daily Pivot Point R2||1954.11|
|Daily Pivot Point R3||1967.54|
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.