Amidst market fluctuations, gold reclaimed its strength, surpassing the $2,000 mark during the American trading session. This rise came as the 10-year US Treasury bond yield dipped below 4.3%, following a surge triggered by US PPI data. This shift in bond yields played a pivotal role in guiding XAU/USD to reverse its trajectory.
Technical Outlook for the Gold Market
The gold market closed on a bearish note last Friday, and the bears continued this trend, causing the price to depreciate significantly to the crucial historical $1,980 price level. This particular price level was the point at which the bull market launched in December of last year. The hammer candlestick that formed on Wednesday points to the fact that bulls are capitalizing on this historical price level to buy the market massively. This resulted in significant bullish price action. In fact, as the market for Friday is closing as a hammer candlestick, the same bullish trend may continue by Monday since that was how the bear market played out this week.
Fundamental Outlook for the Market
During the early European session on Friday, gold prices (XAU/USD) saw some interest from buyers as they sought to extend their rebound from a recent low near $1,984. Meanwhile, uncertainty surrounding the Federal Reserve’s stance on interest rate cuts kept USD bulls cautious, thus supporting gold’s upward momentum. However, a rise in US Treasury bond yields, fueled by hawkish comments from Atlanta Fed President Raphael Bostic, provided some backing for the US dollar, limiting gold’s gains.
Furthermore, a generally positive sentiment in equity markets acted as another factor constraining significant upward movement in gold, given its status as a safe-haven asset. Investors are now eyeing key economic indicators like the Producer Price Index (PPI), Housing Starts, and Michigan Consumer Sentiment Index, as well as speeches from influential FOMC members, to gauge USD strength and influence gold’s direction. Attention will then shift to the release of FOMC meeting minutes next Wednesday. Despite these dynamics, gold is poised to record a second consecutive week of losses.
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