As US yields rise in response to US data, gold falls below $1,980.
FUNDAMENTAL OVERVIEW
The price of gold continued to decline each day and fell under $1,980 on Friday. Better-than-expected S&P Global PMI data releases from the US gave rise to a rise in the benchmark 10-year US Treasury bond yield of about 1%, which had a negative impact on XAU/USD.
The range bound structure built around $2,005.00 in the early European session has been broken by the gold price (XAU/USD). The price of the precious metal has fallen below the psychological level of $2,000 amid a comeback in the US Dollar Index (DXY) following a protracted consolidation.
Investors are putting their money into the US Dollar Index (DXY), while Federal Reserve (Fed) policymakers persistently push for more interest rate increases while denying concerns about an impending US economic recession. Data on weekly unemployment claims that were announced on Thursday confirmed the weakening labour market. According to the data, weekly jobless claims rose to 245K, above both the consensus estimate and the previous announcement for the week ending April 14 of 240K.
The release of the US S&P PMI preliminary data in April will be crucial going forward. The Manufacturing PMI will arrive at 49.0, which is less than the previous report of 49.2, according to consensus. The Services PMI is likewise assessed as being lower at 51.5 compared to the originally reported figure of 52.6. An additional downturn in US economic activity could increase the likelihood that the Fed won’t raise interest rates again beyond May, despite the expectation for two straight increases of 25 basis points (bp).
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
Gold is currently trading in up channel.
Gold is currently trading below 5&20 SMA.
RSI is in buying zone which suggests bullishness and Stochastic is suggesting downtrend.
GOLD resistance is at 1995.30 & its immediate support level is 19883.20
HOW TO TRADE GOLD
Gold was trading higher until it faced resistance, at that point a bearish engulfing was formed. The price then started moving lower and is currently trading at a support zone; if this zone is broken, additional declines may be expected.
