On Friday, the price of gold is continuing its recent downward trend as it trades at three-month lows of $1,910. The US dollar (USD) is extending its earlier halting rebound along with. US Treasury bond yields as it waits for new guidance from the Fed and the US S&P Global Preliminary PMI data.
The focus is on global preliminary PMIs.
Gold prices continued to decline on Thursday. As the US Dollar made a remarkable return in response to hawkish US rhetoric. Policymakers at the Federal Reserve (Fed) and broader risk aversion.
Jerome Powell, the chair of the Federal Reserve, stated in his second day of testimony before Congress on Thursday. That policymakers believe “it will be appropriate to raise rates again this year. And perhaps twice,” if the economy performs as predicted. Despite rates being at an adequately restrictive level. Michelle Bowman, the governor of the Federal Reserve (Fed), stated. That “additional policy rate increases” will be necessary to attain a level that is adequately restrictive and to manage inflation.
Additionally, the Bank of England (BoE) shocked the markets by raising interest rates by 50 basis points (bps). Despite keeping its policy guidance unchanged.
Recession chances are increased by hawkish global central banks’ projections, which also increase US dollar and US Treasury bond yields.
However, anticipation of further tightening of monetary policy by major global central banks exacerbated recessionary fears. Which fueled a new round of risk aversion and raised the safe-haven US Dollar above its key rivals and the price of gold pegged in USD.
While supporting the rebound of the US Dollar and further depressing the price of non-yielding. Gold, strengthening wagers that higher rates will remain in place for a longer period also helped US Treasury bond yields gain ground.
Markets mostly overlooked the mixed United States weekly Jobless Claims. And Existing Home Sales data as central banks’ predictions returned to the fore. The probability that the Fed will increase rates by 25 bps at its policy meeting next month is now estimated by the markets to be 77%.
Now, in order to get a new perspective on the state of the global economy, focus will move to the preliminary business PMI surveys from all of the economies in the Euro region and the United States. Risk-off flows are anticipated to flare up and support the US Dollar’s recovery while igniting the “sell everything” mood across the financial markets should the Eurozone and US data disappoint and signal to an inevitable slowdown in the global economy. Buyers might be saved, though, by the week’s end flows and potential profit-taking in the price of gold.
Gold Technical analysis
On the daily chart, gold is seen hanging precariously just above the low of March 16 ($1,908). After on Wednesday it finally broke through the low of March 17 ($1,918 on a daily closing basis).
The price of gold could attempt a dead cat bounce towards the pivotal 100-Daily Moving Average (DMA) at $1,942. If the former protects the downside for the time being. The nadir on March 17 Gold bulls may face difficulties. On the road to recovery, however, at $1,918 and the $1,930 round figure.
The 14-day Relative Strength Index (RSI) is currently trending higher, while it is still below the midline, supporting the notion of a future decline in the price of gold.
In contrast, if gold sellers continue to be resolute, a new decline towards the $1,900 level cannot be ruled out upon a breach of the low of $1,908 set on March 16. The $1,886 low from March 15 is where gold bulls can expect their next practical safety net.
