Gold is attempting to extend its previous weakness while defending the $1,950 level. The extended rebound in the US Dollar (USD) bodes ill for the gold price. As investors shift their focus to incoming US economic data due in the second half of this week. Despite improving market sentiment, gold has been trading choppy in a familiar range this week. Holding the corrective downside amid a broad-based US Dollar comeback.
Treasury bond yields in the United States trade listlessly as traders’ re-price Federal Reserve policy odds.
The Nasdaq, the tech-heavy index in the United States, has entered a bull market, having gained 20% this year. Lifting overall sentiment in the country last session. Meanwhile, the chances of the US Federal Reserve raising interest rates by 25 basis points (bps) in May appear to be gradually increasing. According to the CME Group’s Fed Watch Tool, the rate is now at 49%. Fears in the banking sector have subsided. And the United States Pending Home Sales Index unexpectedly rose 0.8% last month to the highest level since August.
Meanwhile, the Pending Home Sales Index fell -21.1% year on year in February, compared to -29.4% expected. Even though US Treasury bond yields consolidated at higher levels. These factors underpinned the US Dollar recovery.
Comments by Republican Representative Kevin Hern, cited by Bloomberg early Thursday. Provided additional legs to the US Dollar’s recovery. “Federal Reserve Chair Jerome Powell, asked in a private meeting with US lawmakers. How much further the central bank will raise interest rates this year, pointed to policymakers’ latest forecasts showing they anticipate one more rate hike this year,” Hern said. increase.
Despite markets’ hawkish pricing of the Federal Reserve’s May rate hike decision, US Treasury bond yields remain unaffected, awaiting a fresh batch of US economic data releases due on Thursday and Friday.
Gold Technical Outlook
Gold price has charted a pennant formation after peaking at $2,010 last week, as seen on the daily sticks.
Gold is currently testing the critical rising trendline support at $1,953, which if broken on a daily closing basis will confirm a down break from the pennant.
The next strong support for Gold bulls is at the $1,940 round level, below which the previous week’s low at $1,935 will be difficult for bears to overcome.
Further south, gold sellers will aim for a test of the bullish 21-Daily Moving Average (DMA) at $1,916, which is currently at $1,914.
The 14-day Relative Strength Index (RSI) is edging lower but remains above the midpoint, implying that some dip-buying may occur in the gold price.
If the price of gold falls, If the above-mentioned trendline support holds. A new run-up towards the static resistance at $1,975 is not out of the question.
On their way to the psychological level of $2,000. Buyers will look for the weekly high at $1,981.
