Gold price is meandering near $1,950 early Monday, as sellers take a breather before the next push lower. The gold price is extending Friday’s sell-off from near $1,990, despite the US Dollar’s ongoing recovery (USD). Gold price is off to a bad start in a holiday-shortened week, as the US Dollar gains ground against its major peers amid widespread risk aversion.
The rise in oil prices rekindles inflation fears, pushing Treasury yields higher.
The previous week’s recovery momentum in the US Dollar gained additional strength early Monday, as the US Dollar rose in tandem with US Treasury bond yields, as the unexpected output cut from OPEC and its allies (OPEC+) sent oil prices up about 6% and rekindled inflation fears. As a result, the gold price has come under renewed selling pressure. and fell further to test the psychological level of $1,950.
Gold price is teasing a breakdown, with the focus on the daily close and the US ISM PMI.
Even though the US Core PCE Price Index came in slightly lower than expected at 4.6% YoY in February, the US Dollar saw a late-week rally.
The data is the preferred inflation measure of the US Federal Reserve (Fed), but it did not deter US Dollar bulls. Last week, the gold price received no support from the decline in US Treasury bond yields, as sellers remained active below the $2,000 supply zone.
Looking ahead, gold traders will be watching for the release of the ISM Manufacturing PMI and Price Paid sub-component from the United States later in the North American session for new clues on the strength of the US economy, which will likely influence the next Federal Reserve policy move.
Gold Technical Analysis
The gold price rebounded from the critical rising trendline support, then fizzled on Friday at $1,958, as sellers fought back control, as seen on the daily sticks.
On an extended sell-off early Monday, gold price eventually breached the previously mentioned support, now at $1,961.
XAUUSD bears, on the other hand, require a daily candlestick close below the latter to confirm a downside break from a two-week-old pennant formation.
If this occurs, a new decline towards the previous week’s low of $1,944 cannot be ruled out. The static support at $1,935 will come into play further south.
Nonetheless, with the 14-day Relative Strength Index (RSI) still above the midpoint, gold bulls may be able to find some bargains at lower levels, limiting the downside.
If the gold price recovers are initiated, bulls must consistently retake the aforementioned trendline support at $1,961. The $1,970 round figure is the next upside target. For XAUUSD bulls, the $1,993 falling trendline resistance will be difficult to overcome.
