In a mixed market, the gold price consolidates gains above the 21-Daily Moving Average.
The gold price is holding to earlier gains at $2,020, with the upside stifled by an overall recovery in the United States Dollar (USD). All eyes are now on Wednesday’s important US Consumer Price Index (CPI) data. For new market pricing of the US Federal Reserve’s (Fed) interest rate outlook.
All eyes are on the US Consumer Price Index and Fed speak.
In the meanwhile, traders will be looking for any new developments in the United States banking sector crisis. As well as comments from Federal Reserve policymakers, on a data-light US economic docket on Tuesday.
Markets are assessing the latest Fed Loan Officer Survey, which was issued on Monday and revealed stricter requirements. And weaker demand for commercial and industrial (C&I) loans to big, middle-market. And small businesses in the first quarter.
Despite the US Dollar’s resurgence, the gold price remains optimistic.
On Monday, market mood improved, with bank stocks witnessing a relief bounce throughout the world. Following the previous week’s sell-off. Initially, risk flows dampened demand for US government bonds and the US dollar. With the rebound in US Treasury bond rates throughout the curve. The US Dollar has reached a new high. a return from near multi-month depths.
As a result, the gold market saw solid two-way trading, initially continuing its rise towards the $2,050 level. On a generally lower US Dollar. Later in American trade. The gold price was unable to maintain its gains as the US Dollar rebounded in concert with US Treasury bond rates. The benchmark 10-year US Treasury rates have risen back over the critical 3.50% barrier, extending a robust US Nonfarm Payrolls-led resumed advance.
Markets are presently pricing in a 90% chance of a Federal Reserve pause in June and a 33% possibility of a rate drop in July. The dynamics surrounding the market’s valuation of the next Fed interest rate move might entirely shift following the release of the crucial United States Consumer Price Index.
Gold Technical Outlook
The short-term technical picture remains largely unaltered, with ‘dip-buying’ expected to keep the gold price supported as long as it defends the modestly bullish 21-Daily Moving Average (DMA), which is now at $2,007.
Immediate resistance is now aligned at the previous day’s high of $2,029, beyond which gold buyers will want to reclaim the psychological barrier of $2,050 on their path to all-time highs of $2,080.
A bullish wedge is still in action after gold price raced past $1,993 on a daily closing basis last week.
The 14-day Relative Strength Index (RSI) is safely above the midline, lending credence to gold price ‘buy-dips’ trades.
If gold bears regain control, the 21 DMA or $2,000 psychological mark will be tested. challenged as the corrective downside accelerates. The previous week’s low of $1,977 is seen as the next key support level.
Deeper drops will put the wedge resistance-turned-support at $1,970 in jeopardy.
