- The price of gold remains in choppy trading conditions as investors await the Fed rate hike of 75 basis points.
- US corporate results weigh on the mood as companies complain of inflation as the main reason for cutting or losing profits.
- Gold Price Forecast (XAUUSD): Trending Down, But Remaining Sideways Ahead of FOMC Meeting.
the price of gold turned negative for the day, after hitting a daily high around $1,728, amid a bearish mood among investors gearing up for the FOMC policy meeting in July. At time of writing, XAUUSD is trading at $1,718.46, down 0.05% on the day.
US companies complain about inflation and rising dollar, headwinds for gold
Several factors, such as Walmart’s cut earnings outlook, blamed on double-digit food prices and high energy prices, and the IMF’s cut global growth outlook for 2022 and 2023, weighed on the feeling. In addition, EU countries agreed to cut their gas consumption by 15%, along with reducing gas flows in the Nord Stream 1 pipeline, adding fuel to the already battered mood. Traders looking for safety pushed the dollar higher. The dollar index, a gauge of the dollar’s value against a basket of its peers, gained 0.54% to 107,060.
Global bond yields followed suit, rising but paring some gains. The US 10-year yield falls three basis points to 2,761%. It should be noted that the inversion of the yield curve between 2 and 10 years has deepened to -0.253%. However, the 3-month US 10-year yield curve has flattened to 0.228%, about to mark recession.
Meanwhile, a light US economic calendar ahead of Chairman Powell and company’s meeting saw the release of BC Consumer Confidence, which fell to its lowest level since February 2021. Lyn Franco, Senior Director of Economic Indicators of the Conference Board, said that Americans “Concerns about inflation – rising gasoline and food prices, in particular – continued to weigh on consumers.” Furthermore, she added, “Looking ahead, further inflation and rate hikes are likely to continue to pose strong headwinds to consumer spending and economic growth over the next six months.”
At the same time, the S&P/Case-Shiller house price index for May fell 20.5% and disappointed expectations, while the US house price index for May rose 18.3% year-on-year, by down from 18.9% in April.
what to see
On Wednesday, the US economic docket will include durable goods orders, retail inventories and pending home sales ahead of the FOMC monetary policy decision.
Gold Price Forecast (XAUUSD): Technical Outlook
The price of gold continues to have a bearish bias, despite holding above the $1,700 price level. The daily EMAs above the spot price, and the failure of the buyers to recapture the May 16 low turned resistance at $1,787.03, would keep the bias intact. Also, the Relative Strength Index (RSI) at 35.80 but pointing lower suggests that the price of the yellow metal is biased lower.
To the upside, a break above the 20-day EMA at $1,741.87 would open the door to challenge $1,750. On the other hand, a break below $1,700 would send the precious metal towards $1,681.
Source: Fx Street
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