Jun 13

Gold rebounds to $2,320 as US yields edge lower

Gold gains traction and trades at around $2,320 in the second half of the day on Thursday. The benchmark 10-year US Treasury bond yield loses more than 1% on the day below 4.3% after disappointing US data and supports XAU/USD.

Technical Overview

From a technical perspective, the overnight failure near the 50-day SMA support-turned-resistance and the subsequent slide favors bearish traders. Moreover, oscillators on the daily chart are holding in negative territory and support prospects for a further depreciating move for the Gold price. That said, any further decline is likely to find some support near the $2,300 mark ahead of the $2,285 horizontal zone. Some follow-through selling will be seen as a fresh trigger for bearish traders and make the XAU/USD vulnerable to accelerate the fall towards the next relevant support near the $2,254-2,253 region. The downward trajectory could extend further towards the $2,225-2,220 area en route to the $2,200 round figure.

On the flip side, any strength beyond the $2,325 hurdle might continue to attract fresh sellers and remain capped near the 50-day SMA support breakpoint, currently pegged near the $2,345 region. This is followed by the $2,360-2,362 supply zone, which, if cleared decisively, should allow the Gold price to retest last week’s swing high, around the $2,387-2,388 area and aim to reclaim the $2,400 mark. A sustained strength beyond the latter will negate any near-term negative bias and pave the way for some meaningful appreciating move in the near term.


Fundamental Overview

Gold price (XAU/USD) meets with a fresh supply during the early European session on Thursday and for now, seems to have snapped a three-day winning streak to a fresh weekly peak, around the $2,341-2,342 region touched the previous day. The Federal Reserve's (Fed) hawkish surprise on Wednesday, to a larger extent, overshadowed softer US consumer inflation figures. In fact, policymakers now see just one rate cut in 2024 as compared to three projected in March, which, in turn, is seen as a key factor driving flows away from the non-yielding yellow metal. 

Meanwhile, the shift in the Fed's projections push the US Treasury bond yields and assist the US Dollar to build on the overnight bounce from a multi-day low. This further seems to undermine the US Dollar-denominated Gold price, though geopolitical tension in the Middle East and renewed political uncertainty in Europe could help limit deeper losses. Market participants now look forward to Thursday's US economic docket – featuring the Producer Price Index (PPI) and Weekly Initial Jobless Claims data – for short-term trading opportunities.