Gold price re-attempts to rise while trading above the 21-day moving average, as the US dollar remains fragile.
After Friday’s protracted drop from all-time highs of $2,080, gold is stabilizing at about $2,020. Awaiting the US Federal Reserve’s (Fed) loan officer survey and the crucial Consumer Price Index (CPI) data from the US. For additional directional impetus.
Following a tumultuous past week, the battered United States Dollar. (USD) is receiving a little relief at the start of a major week on Monday. Allowing Gold price to tread water. Fears over the US banking sector roiled markets last week. Driving safe-haven flows into XAU, the classic safe-haven asset.
Bank shares in the United States fell as the country’s banking sector continued to suffer from a confidence crisis. PacWest’s stock dropped 50%. While Western Alliance’s stock dropped roughly 40%. The depreciation This week, bank shares gained traction when the First Republic Bank was seized by regulators. And sold to America’s largest bank, JPMorgan Chase. As a result, gold prices continued to rise and reached new highs of $2,080 last Thursday.
The US NFP outperforms, while China increases its gold reserves.
The headline US Nonfarm Payrolls (NFP) increased by 253K in April, according to data released on Friday. 179K are predicted, up from 165K before. Unemployment fell unexpectedly to 3.4% in April, while annualized Average Hourly Earnings increased to 4.4% in the reporting month, up from 4.2% predicted. The US Dollar’s recovery accelerated due to solid employment increases in the United States.
The end-of-week flows, along with the repositioning of pre-US inflation data, pushed investors to take profits on their XAUUSD longs. So far this Monday, the gold price is attempting to regain upward traction, as the US Dollar is expected to exhibit pessimistic sentiments in the face of increasing US default threats.
“US Treasury Secretary Janet Yellen offered a harsh warning on Sunday that failure by Congress to act on the debt ceiling may result in a “constitutional catastrophe.” “It would also call the federal government’s creditworthiness into question,” Reuters wrote.
Furthermore, the People’s Bank of China (PBOC) increased its gold holdings for the sixth consecutive month, providing some support to the gold price. “China increased its gold reserves for the sixth consecutive month in April to 66.76 million ounces (1,893 tons),” according to the Global Times. China’s gold holdings increased by 260,000 ounces month on month, according to People’s Bank of China statistics released on Sunday, with 4.12 million ounces of gold acquired since November 2022.”
The US Federal Reserve’s loan survey data is being scrutinized ahead of the US Consumer Price Index report.
Dovish Federal Reserve policy statements, along with Chairman Jerome Powell’s cautious assessment of the country’s banking system, impacted severely on the US Dollar, contributing to the strength of the USD-denominated gold price.
Although the rapid recovery in US Treasury bond rates in the latter half of the week energized Gold sellers. It fueled a substantial fall in the Gold price to challenge the $2,000 level.
Later Monday, the Fed’s loan officer survey will be widely watched. As it may reveal how tight lending conditions are after three US regional lenders failed in recent weeks. Downbeat data is anticipated to deepen the US Dollar’s suffering, allowing gold to continue its upward trend.
Traders will also be watching developments from Capitol Hill. As politicians strive to reach an agreement on the approaching US debt ceiling. The US Consumer Price Index data, which is coming on Wednesday. Will be critical for gold dealers in determining the Federal Reserve’s interest rate action.
Gold Technical Outlook
Gold is defending the horizontal 21-Daily Moving Average (DMA) at $2,005, as shown on the daily chart, after shifting direction on Friday to test it.
As long as gold purchasers can keep the fort above the latter, the positive potential in the gold price is expected to continue intact towards the immediate resistance level of $2,050.
XAU bulls must first break through Thursday’s low of $2,030. The 14-day Relative Strength Index (RSI) is rising over the midline, indicating an upward tilt.
On the other hand, a daily candlestick closing below the 21 DMA or the crucial $2,000 barrier will enhance the current corrective move, allowing for a test of the wedge resistance-turned-support at $1,976, which corresponds with the previous week’s low.
Note On May 2, the gold price confirmed a bullish wedge by smashing past $1,993 on a daily closing basis.
