Gold rises to around $2,030 as US yields decline
FUNDAMENTAL OVERVIEW
As of Tuesday, the price of gold has risen above $2,030 after closing Monday essentially flat. The benchmark 10-year US Treasury bond yield is still below 3.5% after a three-day recovery, which permits XAU/USD to gain bullish momentum.
This allows the yellow metal to profit from the market’s cautious attitude in advance of the US talks to avoid the default. However, amid a lacklustre day, the recent recovery in the US Dollar and Treasury bond yields, as well as inflation forecasts, stimulate the XAU/USD purchasers.
As traders awaited additional clues on the U.S. economy from important inflation data due this week, gold prices held above critical levels on Tuesday and maintained narrow trading ranges, although worries about a banking crisis and a potential recession were still present.
With a stronger-than-expected labour market report suggesting that the Federal Reserve will remain hawkish for longer this year, the yellow metal experienced a significant amount of profit taking on Friday and fell from near record highs.
Markets have started to reduce their expectations on future rate cuts this year even as they anticipate the bank to likely suspend its cycle of rate hikes. Interest rates likely will continue to be higher for a longer period, preventing any gains in gold.
Demand for gold as a haven decreased recently as well. Fears of a coming banking crisis in the United States decreased after a Federal Reserve survey of loan conditions on Monday revealed that the recent failure of numerous banks had not adversely affected credit conditions as much as anticipated.
By 21:58 ET (01:58 GMT), spot gold increased 0.1% to $2,022.85 an ounce, while gold futures declined 0.2% to $2,029.85 an ounce.
The U.S. consumer price index inflation statistics, which are due on Wednesday, are now the focus of the market. These data are anticipated to reveal that inflation fell somewhat in April from the previous month. The Fed may respond to the news in a hawkish manner because inflation is still forecast to remain considerably over its yearly target range.
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
Gold is currently trading in up channel.
Gold is currently trading above 20&50 SMA.
RSI is in buying zone which suggests bullishness and Stochastic is suggesting down trend.
Gold resistance is at 2028.90 & its immediate support level is 2018.71
HOW TO TRADE GOLD
The price of gold is currently facing resistance as it moves up in a channel, and if it breaks through this area, more gains to the next level of resistance are possible.
