Gold Forecast: XAU/USD bears face bulls at critical time

• Gold bears are putting pressure on the bulls in a critical area of ​​the daily chart.
• The price of gold is under pressure despite the increasing odds of a recession.

At $1,806, the price of gold it is down 0.66% after falling from a high of $1,825.21 to a session low of $1,802.77, breaking out of its consolidation range. Traders have steered away from the yellow metal even as stocks, the dollar and bond yields have fallen.

The drop came even as investors turned away from equities, with the S&P 500 Index last down 1.25% in what has been a mixed week on sentiment and data. The highlights of the data docket on Thursday were the acceleration in the pace of monthly growth in the PCE price index, the steady expansion in personal income and the slowdown in spending growth. Personal income rose 0.5% in May, just as expected after the previous month’s 0.5% increase.

After adjusting for a 0.6% rise in the PCE price index, real personal consumption fell 0.4% in May, following a 0.3% rise in April. Core PCE prices increased 0.3% for the fourth consecutive month, reducing the yoy rate to 4.7% from 4.9% in the previous month. Gold briefly bounced after the US data, but quickly moved back into the tight range it has been in for the past few sessions.

In other data, the Chicago PMI fell to 56.4 in June from 60.3 in May. Other manufacturing sector data already released have suggested slower growth or outright contraction. The ISM national index will be published on Friday. Initial jobless claims fell by 2,000 to 231,000 in the week ending June 25, but the four-week moving average rose by 7,250 to 231,750, continuing the chain of gains.

Meanwhile, the US dollar also fell, making gold more affordable for international buyers, with DXY falling to 104.645, the day’s low so far. US bond yields fell sharply, a lifeline for the precious metal as it pays no interest. The 10-year US bond yield last dipped to 2.980%, near its three-week low of 2.97%.

Gold prices are under pressure despite increasing recession odds, in contrast to recent price action pointing to safe-haven flows supporting the yellow metal,” analysts at TD Securities said.

“In fact, gold prices have completely decoupled from market prices for Fed hikes over the past month, and have instead increased their relationship to the dollar, pointing to a lesser magnitude of idiosyncratic flows for the yellow metal.

Although the bias remains to the downside in gold, participants will need a catalyst to shake off complacent longs in precious metals.