Early on Tuesday, the price of gold is consolidating near multi-day lows and is close to $1,950. Along with the upward trend in US Treasury bond yields, hawkish US Federal Reserve (Fed) rate hike. Forecasts continue to provide the US dollar’s (USD) rebound some momentum.
In response to hawkish Federal Reserve expectations, the US dollar continues to recover.
Gold price started the week on the wrong foot, extending the bearish momentum into the third straight day. However, the US Dollar is finding support from rising bets on a Federal Reserve rate hike in July. Which are currently at 75%, according to the CME Group’s Fed Watch Tool. Hawkish Fed bets are also benefiting US Treasury bond yields, with the benchmark 10-year US Treasury bond yields flirting with record highs. the 3.80% mark, which is currently up 0.75%.
Additionally, markets continue to be risk adverse as investors worry whether the People’s Bank of China’s (PBOC) most recent. Monetary policy easing would assist reignite the post-pandemic economic recovery in the second-largest economy in the world. After lowering the rates on its Medium-term Lending Facility (MLF) last week. The Chinese central bank dropped the rates on its one-year and five-year Loan Prime Rates (LPR) by 10 basis points on Tuesday.
Investors get uneasy due to concerns about China’s economic development. And the Fed’s hawkish outlook, leading them to seek shelter in the US Dollar at the expense of the price of gold priced in USD. A further factor contributing to the decline in the Gold price is the concern that China. The world’s largest consumer of gold, will not be able to maintain its economic growth. Due to uncertainty around Tuesday’s Chinese interest rate announcement. US Dollar purchasers were in charge on Monday due to the nation’s Juneteenth holiday. Following numerous Fed members’ hawkish comments on Friday. Investors evaluated the likelihood of a rate hike by the Fed. As they emerged from the central bank’s “blackout period.”
In anticipation of a breakout following Fed Chair Jerome Powell’s speech, the gold price is range-bound.
All eyes are now focused on Fed Chair Jerome Powell’s appearance this week before the House Financial Services Committee and the Senate Banking Committee regarding the Semi-Annual Monetary Policy Report. Since the Fed’s Monetary Policy Report was released last Friday, attention will remain on Powell’s Q&A session for additional details on the Bank’s strategy, which might provide the gold price with a new trading trend.
Gold Technical analysis
Technically, nothing appears to have changed. The price of gold didn’t change on Tuesday, but it is still at risk after failing to hold above the crucial bearish 21-Daily Moving Average (DMA) at $1,955.
The flat 100 DMA around $1,943 continues to provide support for gold buyers in the meanwhile. As a result, the range play is probably going to grow before the mid-tier US Building Permits and Housing Starts data. Additionally, the Fed speak will be carefully examined.
However, risks remain skewed to the downside for the price of gold as the 14-day Relative Strength Index (RSI) is heading below the midline.
To challenge the previous week’s high at $1,971, a sustained move above the 21 DMA resistance-turned-support is required. The slightly bearish 50 DMA at $1,985 will be important further up.
In contrast, if Gold sellers find a firm footing below the strong horizontal 100 DMA support at $1,943, a further decline in price below last week’s low of $1,925 will be anticipated.
