- Gold prices trimmed Monday’s gains as market sentiment improves.
- Yields on 10-year US Treasury bonds update three-year highs amid aggressive comments from Fed officials.
- Could we see a minimal job loss recession? Why not?
the price of gold declined throughout the European session, now trading near a daily low of $1,922.57, hovering around $1,925. The positive tone in equities is dampening demand for safe-haven assets, keeping the XAU/USD within family levels. Meanwhile, the dollar accelerates its decline as Wall Street starts the day on a positive basis, with mixed losses across the board.
US indices closed lower on Monday as Fed funds futures imply traders see a 60.7% chance the Fed will hike rates 50 basis points in May, up from 52%. before Federal Reserve Chairman Powell announced a more aggressive tightening. Speaking about the economic outlook at the National Association for Business Economics’ Annual Economic Policy Conference, Powell said that if they need to raise the fed funds rate by more than 25 bps in a meeting or meetings, they will do so, adding that “inflation it’s much too high” and that a balance sheet reduction could come as early as May.
On the war front, Moscow said talks with Ukraine are ongoing but said they should be more active and substantive. kyiv, on the other hand, said it would discuss the situation in Crimea and Donbass after a ceasefire.
10-year US Treasury yields rise to a new high since May 2019 of 2.375% as market fears of inflation are magnified, pushing Fed policymakers toward tighter monetary policies. aggressive in the future.
On Monday, Atlanta Fed President Bostic and Richmond Fed’s Barkin promoted the US central bank’s ability to contain inflation by indirectly signaling a faster pace of rate hikes. However, comments from Fed Chairman Jerome Powell, who said, “The Fed will raise rates by more than 25 bps in a meeting or meetings if necessary,” offered a big bullish boost for Treasury coupons. .
Gold Price Technical Analysis
XAU/USD is approaching the 50% Fibonacci retracement of its January/March rally at $1,925.20, the immediate support level. The 20-day SMA continues to provide dynamic resistance, now at $1,946, while the technical indicators on the daily chart are stuck at their mid-lines, with no clear directional strength.
It bottomed out for the week at $1,985, just before a critical Fibonacci support level, the 61.8% retracement of the aforementioned rally at $1,980. Gold price could go into sell-off mode on a break below it.
However, the risk-off environment is likely to keep the shiny metal afloat. The bulls will get braver if XAU/USD breaks above $1,960, an area of strong static resistance.
Additional technical levels
Source: Fx Street
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