- A softer risk tone helps safe haven gold reverse a modest intraday drop.
- The rebound in US bond yields benefits the dollar and caps the yellow metal’s gains.
- Investors are now awaiting this week’s key US macroeconomic data for further momentum.
The gold has captured some buying in the $1,846 zone on Tuesday and has again approached the daily high around $1,855 at the start of the European session. The previous day’s optimism, sparked by the easing of China’s COVID-19 lockdowns, turned out to be short-lived amid the doubts about whether central banks can raise interest rates to curb inflation without affecting economic growth. Concerns resurface after the publication of China’s official PMIs, which showed a contraction in both the manufacturing and services sectors during the month of May. This, coupled with concerns that global supply chain disruption will continue to push up consumer prices, weighed on investor sentiment and benefited the safe-haven precious metal.
Nevertheless, the resurgence in demand for US dollars prevented the price of gold, denominated in dollars, from making significant gains. The sharp rise in US Treasury yields helped the dollar recover from a one-month low hit the previous day and acted as a headwind for the yielding yellow metal. Investors were also reluctant to open aggressive positions ahead of major US macroeconomic data releases, including the monthly NFP jobs report due on Friday. This makes it prudent to wait for a strong continuation of buying before positioning for an extension of the recent bounce from a multi-month low around the $1,787-$1,786 region touched on May 16.
This week, the US economic calendar is quite busy, beginning with the release of the Conference Board’s consumer confidence index. This, along with US bond yields, will influence dollar price dynamics and provide some momentum to gold prices. Aside from this, investors will look to the broader market risk sentiment to take advantage of some short-term opportunities around XAU/USD.
gold technical levels
Source: Fx Street
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