Update: The price of gold is down for the second session in a row, failing to find acceptance at higher levels. Widespread weakness in the US dollar is preventing gold buyers from being unimpressed amid Asian equity risk. Additionally, US Treasury yields are trying to rebound, weighing on yieldless gold. At press time, the price of gold is down 0.40% on the day, trading near daily lows of $ 1,872. Investors are waiting for US CB Consumer Confidence data for further momentum.
On Monday, the Wall Street rally, led by tech stocks, capped attempts to raise the price of gold, while losses were limited by falling Treasury and dollar yields. Gold prices remained cautious amid a mixed Fedspeak and light trading environment that cleared over the holidays, as inflation fears continued to emerge.
The price of gold is up 0.11% at the time of writing, overlapping the 10 and 20 EMAs on the 4-hour chart as the greenback languishes near its four-month lows.
At the time of writing, XAU / USD is trading at $ 1,883.47 and has gone from a low of $ 1,875.20 to a high of $ 1,887.07.
The dollar index, DXY, traded around the 90 mark and is currently down 0.22% on the day, surpassing Friday’s four-month low of 89.646.
Meanwhile, many Fed speakers are in hiding and key data towards the end of the week should prevent markets from getting too bearish on the greenback.
The dollar may remain firmer in a market where traders “need to start valuing a slightly more hawkish Fed,” wrote Win Thin, global head of foreign exchange strategy at Brown Brothers Harriman (BBH) today.
Over the past few sessions, we’ve heard from Fed officials getting more belligerent lately who are embracing the notion of phase-out as early as possible.
The next June dot plots will be very interesting, and we suspect that more than four will see the first rise in 2022. Still, we are disappointed that the US 10-year yield starts this week at 1.62%, near the recent low end, ” BBH analysts said.
“ However, the steepest drop in breakeven inflation pushed US real yields higher, with the 10-year real at -0.82%, the highest since April 30. A continued rise should help the dollar gain more traction. ”
Looking ahead, data expected on Friday, including U.S. personal consumption and inflation numbers, could lead markets to anticipate a more hawkish tone from the next Fed policy meeting on June 15-16.
Another theme the markets are watching is progress on a new stimulus package in the United States after the White House slashed its infrastructure bill to $ 1.7 trillion on Friday but failed to earn the support from Senate Republicans.
Meanwhile, analysts at TD Securities have argued that “it is too early to talk about a thin discussion in the markets.”
“ Ultimately, our rate strategists are also warning that it is still too early to talk about typing talk, which suggests that the gold bugs will likely benefit from the continued surge in flows for now. ”
Technical analysis of gold
According to the start of the week’s analysis, Chart of the week: Gold is hiding at monthly resistance, 4 hour chart is being watched as price climbs on critical resistance as follows:
Update: Gold (XAU / USD) remains lower, down 0.16% around the intraday low of $ 1,877.32, in the middle of the initial Asian trading session on Tuesday. After applauding the weak US dollar and the mood for risk, gold appears to consolidate recent gains as US Federal Reserve (Fed) officials remain divided over the need for tapering talks. Inflation expectations in the United States could also be negative for gold prices, which are leading last week’s rebound to a multi-day high.
Following comments dismissing reflation fears from Fed Governor Lael Brainard and St. Louis Fed Chairman James Bullard, Kansas City Federal Reserve Chairman Esther George said, according to Reuters, that ‘she did not dismiss fears of a surge in inflation.
It should be noted, however, that the S&P 500 Futures remains slightly long while tracking Wall Street gains, even though Fed policymakers have troubled market sentiment and gold prices lately.
Going forward, gold traders should pay attention to Fedspeak ahead of Friday’s personal consumption expenditure (PCE) price index figures for Apri for clear direction.