- Gold price is struggling to recover from $1,940.00 as the focus is on the US Services PMI.
- Following the release of a bleak manufacturing PMI, weakness in the service sector could fuel volatility in the USD Index.
- The yields offered by the 10-year US government bonds maintain gains above 3.74%.
The price of gold (USD/XAU) has defended its fall after a new four-day low around $1,940.00 in the American session. The precious metal is expected to offer bullish action.
Following the release of last week’s Manufacturing PMI, a negative result from the services sector could drive volatility in the Dollar Index (DXY). US factory activity posted its seventh straight contraction as businesses struggle to meet their fixed and working capital needs amid rising Federal Reserve (Fed) interest rates and tight credit by US regional banks.
The US Services PMI was reported down to 51.5, down from the previous release of 51.9. The new orders index, which reflects future demand, stood at 56.5 versus the previous release of 56.1.
At press time, the Dollar Index was facing marginal pressure as it attempted to cross the immediate resistance at 104.40. Following the release of the US Non-Farm Payrolls data, it is essential to discuss the Fed’s interest rate policy. The investment community will get more clarity after learning the inflation figures for May.
Meanwhile, the S&P 500 is expected to open slightly higher. US stocks are expected to continue the optimism on Friday amid consistent macros. Yields offered on 10-year US government bonds hold gains above 3-74%.
Gold Technical Analysis
Gold price witnessed intense selling after a mean reversal move to near the 200 EMA at $1,977.32 on a four-hour scale. The precious metal is pulling back towards key support drawn from the March 22 low of $1,934.34.
The Relative Strength Index (RSI) (14) is hovering around the 40.00 threshold. The bearish momentum will be triggered by a break in the 20.00-40.00 range.
Gold four hour chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
