The gold price is maintaining its comeback in the face of low US Treasury bond rates.
In Wednesday’s trade, gold has stalled its recent rapid turnaround from near six-week lows of $1,952. In the midst of the US debt-ceiling crisis. The US Dollar (USD) is trading around two-month highs against its main competitors.
US debt-ceiling standoff breathes new life into the US dollar.
The US Dollar regained its footing and hit a new two-month high across the board on Tuesday. Extending the Gold price decline to a six-week low of $1,952. Gold bulls, on the other hand, found support at that level and staged a strong recovery. As US Treasury bond rates fell dramatically from two-month highs on widespread risk aversion.
Moreover markets remained risk-averse following the release of preliminary Manufacturing and Services PMI figures from the Eurozone. And the United Kingdom, which fueled fears about a global economic downturn. Risk sentiment deteriorated further in American trade when the preliminary Manufacturing PMI in the United States unexpectedly fell into contraction in May, coming in at 48.5.
Furthermore, discussions regarding extending. The US debt ceiling have stalled after House Speaker Kevin McCarthy stated that the two sides have failed to achieve. An agreement to avoid the first-ever US default. While Republican Representative Garret Graves stated that no further meetings are scheduled. A combination of these depressing factors the market’s appetite for risk assets was destroyed by the news. Which reinforced the US Dollar’s safe-haven appeal alongside US government bonds, shattering US Treasury bond rates across the curve.
Pay attention to Fed Minutes and US debt-limit developments.
As the impasse continues, markets remain cautious with the looming threat of a US default. As a result, if risk flows pick up pace ahead of the Minutes of the US Federal Reserve (Fed) May policy meeting. The US Dollar is expected to maintain its lead. If the Minutes are dovish.
However it will support Chair Jerome Powell’s recent dovish comments, causing the Greenback to fall further along with US Treasury bond rates. While bode good for the USD-denominated gold price.
Furthermore, developments concerning the United States’ debt. Markets will keenly monitor the limit and Fed speak for new trading impetus.
Gold Technical analysis
If buyers fail to gain acceptance above the falling trendline resistance at $1,975. On a daily closing basis, gold sellers are likely to retake control.
Moreover gold price’s rebound on Tuesday might fizzle out, exposing the downside again towards the $1,960 static support. Beyond which the six-week low at $1,952 could be tested.
Furthermore, the March 27 low of $1,944 might come to Gold bulls’ aid. The 14-day Relative Strength Index (RSI) is trading slightly below the midpoint, which keeps gold sellers optimistic.
On the other hand, immediate opposition is indicated at the falling trendline. Which is located at $1,975.
