The gold price is seeking a recovery from about $1,940 early Thursday. The gold price fell 1% in Wednesday trade as US Treasury bond rates soared following the Bank of Canada’s (BoC) unexpected rate hike decision. Following a halt since March.
Federal Reserve pause bets have been reduced in response to the Bank of Canada’s unexpected boost.
On Wednesday, the United States Dollar (USD) saw tremendous volatility. And swung on both sides before finishing nearly unaltered. The main mover of the gold price, was the US Treasury bond rates. Which rescued the day for the Greenback bulls.
Despite cautious optimism in the initial half of the day. The US Dollar faltered, prompting gold bulls to retest the $1,970 mark. However, The Bank of Canada’s (BoC) unexpected 25 basis point (bps) rate boost to 4.75% helped. Markets reduce expectations of a June Federal Reserve rate hike halt.
The Bank of Canada’s hawkish surprise reminded markets. That a Fed pause next week does not signal the end of the Fed’s hiking cycle. Market pricing for a June Fed pause has declined to 63% from 75% before to the BoC policy pronouncements.
This resulted in a significant surge in US Treasury bond rates throughout the curve, strengthening the US Dollar at the expense of gold. The benchmark 10-year US Treasury yield rose 12 basis points to new weekly highs of 3.80%.
So far on Thursday, the gold price has been maintaining the earlier sell-off, despite a respite in US Treasury bond rates. upsurge. If the atmosphere worsens in the coming day, the US Dollar would likely draw safe-haven flows, limiting the recovery in gold prices. However, sustained US Dollar weakening due to potentially dismal US Jobless Claims might offer more support to the gold price recovery.
Gold Technical analysis
The short-term technical prognosis for the XAUUSD appears unchanged, as the range play is expected to continue as long as the Gold price remains between the two important Daily Moving Averages (DMA), the 21 and the 100, which are presently at $1,969 and $1,940, respectively.
The 21 and 50 DMA Bear Cross continue to hinder the gold price’s rising aspirations. Regardless of the 14-day Relative Despite an increase in the Relative Strength Index (RSI), the gauge remains below the 50-mark, lending credence to the negative bias.
Gold bears require a daily close below the 100 DMA to extend the decline towards the previous week’s low of $1,932, below which the March 17 low of $1,918 will be challenged.
In contrast, the gold price recovery will gain traction only if it reclaims the downward-pointing 21 DMA around $1,969. Further higher, XAUUSD buyers may face firm resistance from the flattish 50 DMA around $1,990.
The psychological level of $2,000 is seen as the next relevant upward goal for XAUUSD bulls.
