Gold Failed To Capitalized On Falling Yields Amid US Dollar Rebound

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  • Gold prices saw a second day of decline on Friday, falling to $2,159 after peaking at an all-time high of $2,223.
  • The Federal Reserve's dovish stance on interest rates kept US yields down, except for the US dollar.
  • Odds for a Fed rate cut in June remained above 70%, according to the CME FedWatch Tool.

The price of gold dropped for the second consecutive day on Friday after hitting an all-time high of $2,223 on Thursday. Renewed demand for the greenback amid falling US Treasury bond yields surprised traders and weighed on the yellow metal. At the time of writing, XAU/USD was recently seen trading at around $2,159, losing approximately 0.90%.

The Federal Reserve's March meeting emphasized the need for policymakers to lower interest rates despite the latest two inflation reports suggesting that it´s re-accelerating. This sponsored the XAU/USD duo's leg up to new all-time highs, but it was short-lived. On Thursday, traders booked profits, triggering a decline of $36 as the yellow metal finished the day with losses of 0.22%.

US Treasury yields failed to climb even though the greenback appeared to be soaring on a two-day rally. It gained 0.47% and was up at 104.45 late in Friday’s North American session. The lack of economic data on the calendar seemingly kept the markets slightly calm ahead of the weekend.


Market Movers: Gold Priced Dropped Despite Falling US Yields

  • Jerome Powell emphasized that the Fed had made progress on tempering inflation. Despite printing two straight months of higher prices, that hasn’t changed the Fed’s outlook for price stability.
  • Fed policymakers kept the Dot Plot unchanged for 2024. Still, the 2025 Dot Plot was revised up from 3.6% to 3.9%.
  • For 2024, the Federal Open Market Committee (FOMC) forecasts that the economy will grow 2.1%, up from 1.4%, while the Unemployment Rate will remain at 4%.
  • Inflation figures in the United States, measured by the Fed’s favorite gauge for inflation, the Personal Consumption Expenditures (PCE), are now the focus. They are expected to be at 2.4%, while core PCE is projected at 2.6%, up from 2.4%.
  • During the trading week, the US docket revealed that the jobs market is solid. However, the economy faces challenges like the slowdown revealed by S&P Global PMIs data. However, the housing market has been mildly recovering, and Housing Starts, Building Permits and Existing Home sales improved.
  • According to the CME FedWatch Tool, expectations for a June rate cut stand at 75%.


Technical Analysis: Gold Traders' Failure at $2,200 Exposed the $2,180 Mark

(Click on image to enlarge)

From a technical standpoint, the XAU/USD cross was seen consolidating above the $2,150 mark, as it was hovering around that area for the last eleven days. Nevertheless, if sellers were to step in, dragging gold prices below the aforementioned barrier, a fall toward the Dec. 28 high-turned-support at $2,088 could be in the cards.

However, on its way down, key support levels must be broken, like the Dec. 4 high, which turned support at $2,146, before challenging the $2,100 figure. On the flip side, if buyers could push prices toward the $2,200 level, that would expose the current all-time high at $2,223 before aiming toward the $2,250 mark.


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