- Gold price edges higher on Monday, up by 0.72%, as US bond yields fall.
- Broad US dollar weakness keeps the non-yielding metal buoyant, underpinned by the US-China conflict in Taiwan.
- Fed’s Bowman: Backs a 75 bps in September and supports “similar-size” moves in subsequent meetings.
- Gold Price Forecast (XAUUSD): Neutral-to-bearish below $1800; otherwise, a test of the 200-DMA at $1842.38 is on the cards.
Gold price rises to fresh week highs around $1790 in the mid-New York session, as the greenback gets battered, down by 0.34%, per the US Dollar Index at 106.217, as traders brace for July’s US Consumer Price Index, amidst a light US calendar on Monday and Tuesday. However, the NY Fed revealed consumer inflation expectations at 6.2%, from 6.8% in June. At the time of writing, XAUUSD is trading at $1787.62.
XAUUSD rises on falling US bond yields as US-China tensions elevate
The market mood is positive, as European bourses are about to close while US equities rise. US bond yields pare some of last Friday’s gains following a stellar US jobs report that added 528,000 employees to the working force, fueling expectations that the US Federal Reserve might not step out of the pedal. It should be noted that the Unemployment Rate fell to 3.5%, so expectations of a dovish tilt by the US central bank faded.
Therefore, XAUUSD traders scaled back their gold longs as US bond yields jumped, while the US 10-year TIPS, a proxy for real yields, edged higher towards 0.370%.
Amidst those plays, geopolitical concerns around Taiwan, and US-China tussles, are also adding uncertainty to the global economic outlook. That said, precious metals witnessed augmented demand, with investors seeking safety in the yellow metal.
Elsewhere, Fed speaking continued during the weekend, with Michell Bowman crossing newswires. She said, “I supported the FOMC’s decision last week to raise the federal funds rate another 75 basis points,” and added that “similarly-sized” hikes should be on the table until we (the Fed) see inflation declining consistently.
In the meantime, the US 10-year bond yield is falling almost six bps, sitting at 2.775%, while US 10-year TIPS is yielding 0.306%, seven bps less than last Friday’s peak. All that said, a tailwind for XAUUSD,
What to watch
The US economic docket will feature July’s CPI, and PPI data on Wednesday and Thursday, respectively. That, alongside further Fed commentary led by Charles Evans, Neil Kashkari, and Mary Daly, would shed some light regarding the posture of the central bank.
Gold Price Forecast (XAUUSD): Technical outlook
XAUUSD is neutral-to-upward biased, though facing solid resistance at the 50-day EMA at $1787.19. Gold traders should be attentive that unless buyers reclaim the $1800 figure, a correction towards the 20-day EMA at $1738.91 is on the cards. However, in the near term, the gold price could test higher prices, supported by the Relative Strength Index (RSI) at 58, gathering upside momentum.
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