Gold Price Outlook: XAU/USD Retreats as Treasury Yields Falter Ahead of US Inflation Report
The price of gold (XAU/USD) is losing its upside momentum after experiencing its strongest surge in four months.
The price of GOLD (XAU/USD) is losing its upside momentum after experiencing its strongest surge in four months. It is now hovering near a five-week high around $1,910 ahead of the release of the United States Consumer Price Index (CPI). Despite the previous day’s three-day winning streak, the XAU/USD is struggling as US bond yields fluctuate after a significant drop.
The GOLD price experienced a substantial increase due to the United States Treasury bond yields nosediving, which has been inactive of late. However, US banking regulators intervened to defend the Silicon Valley Bank (SVB) and the Signature Bank, leading to the biggest daily decline in the US two-year Treasury bond yields since October 1987.
Meanwhile, the US 10-year yields also plunged to a monthly low due to the sudden shift in the market’s Federal Reserve bets caused by the financial market risks emanating from these banks.
It is important to note that the US 10-year Treasury bond yields are hovering at nearly 3.56% following a rebound from the bottom of 3.418%. In comparison, the two-year counterpart has slightly increased to around 4.05% at the press time, bouncing back from the lowest levels since September 2022.
As a result, the yield curve inversion has decreased slightly, allowing the US Dollar Index (DXY) to recover. The DXY started the week’s trading with a three-day downward trend, declining the most in two months on Monday, and is now trading mildly near 103.68 at the latest.
The buyers of XAU/USD are still lured by bets on the Federal Reserve. Despite the recent pause in the US Treasury bond yields’ downward trend, the Interest Rate Futures indicate that the Federal Reserve’s hawkish bias may have run out of steam, keeping the XAU/USD bulls optimistic.
Gold Technical Outlook
The price of GOLD has tested the $1,913 level and is now rebounding bullishly, reinforcing expectations for continuing the bullish trend throughout the day. The next main stations for the bullish trend are the $1,928.60 and $1,960.00 levels.
This positive scenario is supported by the EMA50, which carries the price from below. It is important to hold above the $1,878.80 level to achieve the expected targets.
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