Gold prices have managed to gain over 0.30% despite facing pressure from high US Treasury yields. The rise in bond yields has made the non-yielding metal less appealing, leading to a modest increase in Gold prices. However, the Greenback has also strengthened, limiting Gold’s rally. At the close of the North American session, XAU/USD was trading at $2,357, up by 0.28% from its opening price.
The surge in Treasury bond yields has pushed the 10-year note yield to its highest level since May, causing an increase in real yields. Real yields tend to have an inverse correlation with Gold prices, which has capped the yellow metal’s upward movement. Additionally, Federal Reserve officials have made hawkish remarks, including Governor Michelle Bowman, which have tempered Gold’s rise.
Traders are now awaiting the release of US core PCE inflation data, which is the Fed’s preferred measure of inflation. The core PCE is expected to show a year-over-year increase of 2.8%, while the headline PCE is forecasted to rise by 0.3% month-over-month. The market is also monitoring Wall Street, which is trading with losses, adding to the mixed sentiment surrounding Gold prices.
Gold prices have been trading in the green but have retreated from three-day highs as US Treasury yields remain elevated. The US 10-year Treasury note yield stands at 4.538%, up by seven basis points, supporting the US Dollar. Fed Governor Michelle Bowman has expressed support for a slower pace of quantitative tightening or more tapered balance sheet run-off, while Minneapolis Fed President Neel Kashkari anticipates no more than two rate cuts in 2024.
Technical analysis indicates that while Gold’s uptrend remains intact, there are signs of exhaustion among buyers, with momentum beginning to fade. The RSI suggests that buyers are losing steam, highlighting the potential for downward pressure on Gold prices. Key support levels include the $2,350 mark and the May 8 low of $2,303, while resistance levels lie at $2,400, $2,450, and $2,500.
The Core Personal Consumption Expenditures (PCE) Price Index is a crucial economic indicator released by the US Bureau of Economic Analysis monthly. It measures the changes in prices of goods and services purchased by consumers in the US and is the Fed’s preferred gauge of inflation. The YoY reading compares prices in the reference month to the same month a year earlier, excluding volatile components like food and energy. A high reading is bullish for the USD, while a low reading is bearish.
