The gold price is building on Friday’s recovery early Monday, as the US Dollar (USD) falls off weekly highs. Tracking lower US Treasury bond rates and an increase in US S&P 500 futures.
The US dollar is easing ahead of a light US docket.
So far in Asian trade on Monday, risk sentiment is rising, reflecting a 0.25% increase in US S&P 500 futures. Which is fueling a drop in the US Dollar. The US dollar is also being sold on profit-taking after two days of astonishing recovery. The decline in US Treasury bond rates is also impacting on the US Dollar, giving gold a temporary lift.
Following the spectacular weekend, investors have dismissed the increasing geopolitical dangers in Russia. Yevgeny Prigozhin, the commander of the Wagner gang of mercenary warriors. Launched an armed uprising in Russia, challenging Vladimir Putin’s two-decade-long hold on power. Tensions have subsided since the armed uprising was unexpectedly ended on Sunday. However, the traditional safe-haven gold is expected to be supported in the aftermath of Russia’s mutiny. And global recession worries.
Despite the US Dollar’s strong rally on Friday, gold prices remained resilient and rallied from three-month lows of $1,911, as recession worries intensified and frightened. Investors after preliminary PMIs revealed worsening business conditions in Europe. The UK, and the US. In June. The US S&P Global Preliminary Composite Index plummeted to a three-month low of 53.0. As the manufacturing sector contracted further. to 46.3 in the previous month.
Concerns over a lengthy global monetary policy tightening-induced recessionary risk increased to the gold price’s safe-haven flows. Broad risk aversion harmed US Treasury bond rates. Which fell dramatically across the time curve even as markets continued to price in further Fed rate rises.
Looking forward, risk sentiment, US Dollar price movement, and Fed rate rise expectations will continue to drive gold prices despite a paucity of top-tier US economic data. Meanwhile, comments by European Central Bank (ECB) and Federal Reserve (Fed) governors will garner some attention.
Gold Technical analysis
According to the daily chart, the gold price has rallied from multi-month lows slightly above the On Friday, the price reached a low of $1,908 on March 16, but the rebound stalled below the important horizontal 100-Daily Moving Average (DMA) of $1,943.
The two levels described above are expected to keep gold prices in check as we approach Fed Chair Jerome Powell’s speech and the US Core PCE inflation data due later this week.
The 14-day Relative Strength Index (RSI) is rising but remains considerably below the midpoint, suggesting that any increase in gold prices is likely to be modest.
Adding to the bearish potential, the 21 DMA is attempting to cut the 100 DMA from above, indicating an approaching Bear Cross.
On the upside, the $1,930 round mark is regarded as immediate resistance, beyond which the 100 DMA at $1,943 will be a tough nut to crack. Alternatively, if gold sellers regain control, the March 17 low of $1,918 might be tested once more. Further south, the multi-month low of $1,911 will be tested, and bullish traders will find support below the March 16 low of $1,908.
