Update: Gold reversed an early North American session dip to the $1,882 area and refreshed daily tops in the last hour. The downtick followed the release of stronger PCE Price Index data, which showed that the Fed’s preferred inflation gauge (Core PCE Price Index) jumped 3.1% YoY in April. The reading marked the highest level since 1994 and validated the higher inflation narrative.
This, in turn, fueled speculations that the Fed might be forced to tighten its monetary policy sooner rather than later. That said, the markets were braced for something worse. This was evident from a rather muted reaction in the US fixed income market, which assisted the non-yielding gold to attract some dip-buying at lower levels and climb back closer to the $1,900 mark.
Meanwhile, the upside is likely to remain capped, at least for the time being, amid an extended rally in the global equity markets. The already upbeat market mood got an additional boost after the New York Times reported on Thursday that US President Joe Biden will announce a $6 trillion budget for the fiscal year 2022. This, along with a broad-based US dollar strength, acted as a headwind for dollar-denominated commodities, including gold, and held bulls from placing aggressive bets.
Hence, it will be prudent to wait for some follow-through buying before traders start positioning for an extension of the recent strong positive momentum witnessed over the past two months or so. In this, regards, the $1,912-13 region, or multi-month tops should act as a key pivotal point for short-term traders and help determine the near-term trajectory for gold.
Update: Gold price is holding the lower ground near $1890, having tested Thursday’s low of $1888, as the US dollar remains firmer amid higher Treasury yields. Hopes for a bigger-than-expected US stimulus package continue to keep the global stocks in a sweet spot, with President Joe Biden aiming for $6 trillion in spending plans ahead of the budget release later on Friday. Gold traders also eagerly await the release of the Fed’s preferred inflation gauge, the PCE Price Index for the next direction in prices. Strong US Core PCE inflation figures could reinforce the Fed’s tapering expectations, boosting the yields at the expense of gold.
Gold (XAU/USD) justifies the double whammy of uncertainty over US inflation and stimulus by printing a three-day losing streak, down 0.20% intraday around $1,890 ahead of Friday’s European session. Market’s cautious sentiment back the US Treasury yields, which in turn weigh on the gold prices by the press time, despite the latest pullback from $1,889.
Test time for Biden, Fedspeak…
US President Joe Biden is ready to take the bold move of announcing a $6.0 trillion budget despite struggling to pass the $1.7 trillion spending plans, signaled by the New York Times (NYT). In doing so,…
Go to the news source: XAU/USD rebounds swiftly from daily lows, back around $1,900 mark