The gold price is defending earlier rebound gains above the $1,960 mark. As the US Dollar (USD) attempts a modest comeback on news. That the US House of Representatives ratified the debt pact to avoid a US default.
The gold price had strong two-way price movement. The day before, but it has been maintaining the current bounce so far on Thursday. The Fed policymakers’ statements on Wednesday encouraged investors to analyses. The possibility of a pause in rate rises by the Fed this month.
All eyes are on the US employment data and ISM PMI.
Markets celebrate the bullish attitude. Which is supported by solid Chinese Caixin Manufacturing PMI data. And the US debt agreement House victory. The news that the United States debt accord had been approved by the House placed. A temporary bid under the US Dollar.
The US debt agreement is approved by the House, but markets rethink Fed rate rise predictions.
However, increased dovish assumptions around the US Federal Reserve. (Fed) interest rate outlook is expected to limit the Greenback’s gains until the US ADP Employment Change data rescues the day. Today is the day for US Dollar bulls.
Furthermore in terms of interest rates, Philadelphia Federal Reserve Bank President Patrick Harker has advocated for a pause at the next meeting. Fed Governor Philip Jefferson stated that delaying rate rises at the next FOMC meeting will allow more time to analyses data. Before deciding on the scope of future tightening.
In the face of dovish Fed speak. The likelihood of a 25-basis point (bps) Fed rate rise in June fell from around 62% to 38%. where it is currently. Increased speculations on a Fed rate rise halt caused a significant sell-off. In the US Dollar and US Treasury bond rates, boosting the price of non-yielding gold to a five-day high of $1,975.
Investors are looking forward to the ADP Employment Change data from the United States. Which is likely to reveal that the US private sector gained 170K jobs in May, compared to an above-forecast 296K number in April. A reading over the 200K barrier is required to resurrect hawkish Fed wagers. And, as a result, reignite the US Dollar’s upside.
Furthermore Gold traders will also be watching the US ISM Manufacturing PMI. And its sub-indices for new clues on the Fed’s interest rate policy. The subject line The ISM Manufacturing PMI fell slightly in May to 47.0, prolonging the current decline. These data will help gold traders prepare for Friday’s important US Nonfarm Payrolls report.
Technical analysis of the gold
Despite the recent gain, the gold price remains a ‘sell on rise’ strategy. As the 21 and 50-Daily Moving Averages (DMA) bearish crossing remains in play. And the 14-day Relative Strength Index (RSI) remains below the midline.
Furthermore immediate support is available at the previous day’s low of $1,954. Below which the psychological level of $1,950 will be tested.
Moreover the bullish 100 DMA around $1,938 will put the bullish commitments to the test. A daily close below the 100 DMA is required to resume the correction towards the low on March 17 was $1,918.
Alternatively, gold buyers will need to break out of the multi-day highs around $1,975. In order to attack the confluence support near $1,990. Where the 21 and 50 DMAs are positioned. Acceptance over the latter level is required to confirm a bullish trend reversal.
