This Friday, the gold price fell for the third day in a row, reaching its lowest level in five days near $2,010. As the US Dollar (USD) clings to recovery gains. Amid a cautious market attitude, gold sellers maintain control.
The US dollar is expected to gain ground this week.
So far in Friday’s trade, cautious optimism has prevailed. Allowing the US Dollar to consolidate Thursday’s astonishing recovery across its major peers. As a result, notwithstanding the continued decrease in US Treasury bond yields. The gold market remains vulnerable to more downward threats. On negative risk sentiment, the benchmark 10-year US Treasury bond yields extend a three-day slump. Penetrating through the 3.50% critical barrier once more.
On Thursday, risk-off flows gained traction, reviving safe-haven demand. Downbeat US Jobless Claims and Producer Price Index (PPI) statistics revived economic concerns. Which were exacerbated by the lingering prospects of a US financial sector crisis and potential default.
Initial Jobless Claims in the United States climbed by 22,000 to 264,000 in the week ending May 6, reaching their highest level since October 2021. Meanwhile, the annualized Producer Price Index grew 2.3% in April. Following a 2.7% increase in March, the lowest rate since January 2021.
The rush to safety increased demand for the US dollar as well as US government bonds. Slamming US Treasury bond yields and the gold price amid a ‘sell everything’ mindset. The gold price is currently defying its bullish inclination. As indicated by technical indicators.
The US Dollar is on course to post its first weekly rise in three weeks. With all eyes on developments concerning the US debt ceiling. “A debt limit meeting between US President Joe Biden and top lawmakers that had been scheduled for Friday has been postponed,” a White House official said on Thursday, “and the leaders agreed to meet early next week.”
Gold Technical Outlook
After rejection just below $2,050 earlier this week, gold sellers have maintained control, aiming for the flattish 21-Daily Moving Average (DMA) at $2,008.
Daily closes below the latter will give the correction more legs, allowing the price to fall towards the bullish 50 DMA at $1,972.
A test of the $2,000 level is expected first, followed by a test of the static support at roughly $1,980.
The 14-day Relative Strength Index (RSI) is remains above 50, indicating that ‘dip-buying’ activity in the gold price is likely to continue.
If gold buyers can hold the 21 DMA support, a comeback towards the $2,020 round figure is possible, above which gold bulls would be bullish. Create new purchasing chances in order to attempt the weekly high of $2,048.
