Gold Price (Yellow Metal) pulls back to $1,878, after rising to the highest levels since May 09, during Monday’s Asian session. The precious metal’s latest weakness could be linked to the US dollar’s broad gains ahead of this week’s Federal Reserve (Fed) monetary policy meeting, as well as the risk-off mood. Additionally, a short-term trend line resistance also challenges the bullion buyers.
That said, the US Dollar Index (DXY) refreshes its monthly high around 104.50 while extending the previous three-day uptrend. The greenback gauge cheers the risk-aversion wave and Friday’s hot inflation data to renew a multi-day high.
US inflation
The DXY rallied on Friday amid increased fears over the Fed’s aggression on skyrocketing US inflation. That said, the headline US Consumer Price Index (CPI) rose to 8.6% YoY versus 8.3% expected while the Core CPI jumped 6.0% YoY compared to the expected drop to 5.9% from 6.2% a month earlier. It’s worth noting that the record low of the University of Michigan Consumer Sentiment Index for June, to 50.2 versus revised down 58.1, couldn’t stop the US dollar bulls.
On the other hand, Beijing witnessed a jump in the covid numbers during the weekend and recalled some of the virus-led activity restrictions together with the mass testing. Shanghai is on the same line. Recently, Beijing’s local government spokesman Xu Heijian mentioned that a covid outbreak linked to a bar in Beijing is ferocious. Furthermore, comments suggesting fresh US-China tussles over Taiwan also probe gold bulls.
US Treasury yields
Amid these plays, Wall Street slumped and the US Treasury yields rallied which in turn propelled the US dollar’s safe-haven demand. That said, the S&P 500 Futures drop 1.0% whereas the US 10-year Treasury bond yields remain mostly unchanged around 3.16% at the latest.
Moving on, gold traders can pay attention to the risk catalysts ahead of Wednesday’s Federal Open Market Committee (FOMC). Should the Fed manage to keep the bulls happy, the XAU/USD prices are likely to reverse the latest gains.
- Gold struggles to extend Friday’s run-up, retreats from five-week high.
- Hawkish Fed bets, China news join short-term resistance line to challenge buyers.
- Risk-aversion can restrict upside moves ahead of Wednesday’s FOMC.
Gold Technical Analysis Report
Gold fails to extend the rebound from one-month-old horizontal support, despite crossing the 200-SMA, as the RSI (14) steps back from overbought territory. Also challenging the metal prices is the three-week-old ascending resistance line, near $1,880 by the press time.
Even if the metal prices manage to cross the $1,885 hurdle, the 50% and 61.8% Fibonacci retracement (Fibo.) of April-May downside, respectively near $1,893 and $1,918, could challenge the gold (Yello Metal) buyers.
Alternatively, pullbacks remain elusive until the quote stays beyond the 200-SMA level surrounding $1,847.
Following that, a horizontal area comprising multiple levels marked since May 18, near $1,825-30, will regain the gold seller’s attention. If at all the metal drops below $1,827, the odds of its slump towards the previous month’s low near $1,780 can’t be ruled out.
Conclusion:
”Indeed, with the Fed’s next moves well telegraphed, the cohort of discretionary traders who have become more prominent since the pandemic era, are reluctant to be shaken out with the post-September Fed path unknown amid growing recession concerns,” they said.
”While this dynamic has seen gold prices remain firm in the face of a strong dollar and rising rates, we still think the yellow metal will ultimately succumb to the Fed’s fight against inflation.”
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“फेड को व्यापक रूप से अपनी नीति दर को 50 आधार अंकों से 1.25% -1.5% सीमा तक बढ़ाने की उम्मीद है। फेड जुलाई में एक और 50 बीपीएस दर वृद्धि का विकल्प चुनने के लिए ट्रैक पर है और अगर इसकी पुष्टि हो जाती है तो इसमें कोई आश्चर्य नहीं होना चाहिए।
सोना सोमवार को पांच सप्ताह के नए शीर्ष 1,879 डॉलर पर सेट हुआ, फिर पीछे हट गया। इस सप्ताह के अंत में बुधवार को होने वाले फेडरल रिजर्व के फैसले पर सभी की निगाहें टिकी हुई हैं । अगर चेयरमैन जेरोम पॉवेल सितंबर में दरों में बढ़ोतरी के खिलाफ पीछे हटते हैं, तो पीली धातु में तेजी आ सकती है , एफएक्सस्ट्रीट के एरेन सेंगेजर की रिपोर्ट।
सोमवार को सोने में गिरावट आई क्योंकि निवेशकों ने जोखिम भरे माहौल में ग्रीनबैक की ओर रुख किया। gold का कारोबार $1,823.39 जितना कम था, जो अब लगभग $1,830 पर हाथ बदल रहा है। देश द्वारा शुक्रवार को अपने नवीनतम मुद्रास्फीति के आंकड़े जारी करने के बाद वित्तीय बाजारों में अमेरिकी ट्रेजरी की पैदावार आसमान छू रही है।
Gold edged lower on Monday as investors rushed into the greenback in a risk-averse environment. Yellow Metal traded as low as $1,823.39, now changing hands at around $1,830. Financial markets are all about skyrocketing US Treasury yields after the country released its latest inflation figures on Friday.
Gold and Fed Reports
I believe ranges will be narrow, allowing traders to play the range. And then, it will be up to the Fed and the outcome for yields. An increase in 10-year yields would be gold-negative and a drop would be positive.
If Fed Chair Jerome Powell shocks markets with a 75 bps hike on Wednesday, it could boost short-term yields and lower long term ones, supporting gold. If the Fed settles for what it communicated – 50 bps and no commitment about September – short-term yields would fall while long-term ones rise, weighing on the precious metal.