- Gold Price fades the bounce off 100-DMA, bears approach short-term support amid firmer USD.
- US Treasury yields regain upside momentum amid hawkish Fed expectations.
- US ISM Manufacturing PMI, risk catalysts to direct short-term Gold Price moves.
- Fed needs to go beyond market expectations to keep USD firmer, NFP may help traders as well.
Gold maintained its offered tone through the first half of the European session and was last seen flirting with the 100-day SMA support, around the $1,880 area. The prospects for a more aggressive policy tightening by the Fed remained supportive of elevated US Treasury bond yields. This, in turn, was seen as a key factor that continued driving flows away from the non-yielding yellow metal.
Hence, the focus will remain glued to the outcome of a two-day FOMC monetary policy meeting, starting this Tuesday. The catalysts which need significant attention from the market participants are the balance sheet reduction and further guidance on interest rates. The guidance from the fed will provide the roadmap for marching towards the neutral rates. The age of helicopter money is shifting to a tight liquidity environment, which will bring a long-term change in various assets.
In addition to the highly anticipated Fed decision, investors this week will take cues from important macro releases scheduled at the beginning of a new month. A rather busy week kicks off with the release of the US ISM Manufacturing PMI, due later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to gold prices.
In the meantime, a generally positive tone around the equity markets might continue to undermine the safe-haven XAU/USD. Moreover, the worsening COVID-19 situation in the world’s largest gold consumers, namely India and China, also weighed on gold prices. Recently, India marked the highest active covid cases in five weeks while China’s Beijing braces for more strict activity controls amid the fresh spread of the virus. The fundamental backdrop seems tilted in favour of bearish traders, though the key event/data risks warrant some caution before placing aggressive directional bets.
Gold technical analysis
Bearish MACD signals and descending RSI line, not oversold, justifies the Gold Price downside towards a convergence of the 100-DMA and 50% Fibonacci retracement (Fibo.) August 2021 to March 2022 upside, near $1,878.
The Gold Price weakness past-$1,878, however, will be challenged by an upward sloping trend line from August 2021, near $1,859, followed by the 200-DMA level near $1,834.
Meanwhile, recovery moves need validation from the 50-DMA level near $1,938. Following that, the upside momentum towards April’s peak of $1,998 can’t be ruled out.
Gold: Daily chart
Trend: Further weakness expected
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.