Gold entered a negative consolidation phase near a multi-month low.
On Wednesday, the gold price (XAU/USD) fell to a six-and-a-half-month low in the $1,873-1,872 range, its worst single-day drop in two months. The precious metal is still on the defensive during Thursday’s Asian session, and it appears vulnerable to extending its rejection decline from a theoretically key 200-day Simple Moving Average (SMA) reached last week.
Bullish USD and higher US Treasury bond rates could keep any rebound move in check.
A high optimistic mood toward the US Dollar (USD), as well asRising US Treasury bond rates may continue to divert funds away from the gold market. Rising expectations on the Federal Reserve (Fed) raising interest rates at least once more in 2023 operate as a tailwind for US bond yields and support the USD. However, the current risk-off atmosphere may provide some support to the safe-haven Gold price. This, along with the possibility of a partial US government shutdown, may deter traders from putting new wagers on the XAUUSD.
Traders are now waiting for the final US Q2 GDP data to provide some momentum later in the early North American session. However, the spotlight will remain on the US Core PCE Price Index on Friday, which will give new clues regarding the Fed’s future interest rate rise route, providing a new directional push to the non-yielding Gold price.
Gold price is hovering at a multi-month low due to a stronger USD and increasing US government yields.
The gold price fell the most in a single day in two months on Wednesday and appears vulnerable to more declines.
Minneapolis Fed President Neel Kashkari’s hawkish statements raise expectations for at least one more rate rise in 2023.
The stronger-than-expected US Durable Goods Orders imply that the Fed will maintain interest rates higher for an extended period of time.
The US Dollar is nearing a 10-month high, while 10-year US Treasury rates are approaching a 16-year high.
The strong US dollar and rising US bond rates may continue to erode demand for non-yielding yellow metal.
Investors are nonetheless concerned about China’s economy. The property sector is under challenges from increased borrowing costs.
Republican US House Speaker Kevin McCarthy on Wednesday rejected a Senate stopgap funding package, moving the government one step closer to its fourth partial closure in a decade.
The risk-off drive may deter bears from putting new bets around the Gold price, limiting losses.
Traders are now looking forward to the final US Q2 GDP, however the US Core PCE Price Index on Friday remains the primary focus.
