Gold Price Update: Gold price is making a minor recovery towards $2,000 early Thursday, following the same pattern as Wednesday’s Asian trading. The decline in the United States Dollar (USD) and US Treasury bond yields is supporting Gold price.
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The US Dollar is holding onto some of its gains from the previous day but is on the defensive this Thursday. The drop in US Treasury yields across the curve is limiting the US Dollar’s upside, which is helping Gold (XAU/USD) price stay afloat. Despite gains in Asian indices, investors remain cautious, as reflected by a slight drop in US S&P 500 futures. Markets are still weighing the possibility of a United States default despite recent progress in US debt ceiling talks.
According to a draft letter written by senators to US President Joe Biden and reported by CNBC News early Thursday, “we urgently request that you prepare to exercise your authority under the 14th Amendment of the Constitution…to allow the United States to continue to pay its bills on-time…preventing a global economic catastrophe.”
On Wednesday, risk sentiment improved and limited the US Dollar’s upbeat momentum after President Biden expressed confidence that there would be no US default. A rally in regional bank stocks also lifted the overall mood, led by Western Alliance Bancorp. The lender reported that its deposits grew by more than $2 billion in the quarter that ended May 12. In response to this positive news, the benchmark 10-year Treasury yields rose three basis points to 3.57% in American trading on Wednesday, putting bearish pressure on non-yielding Gold price.
The focus remains on updates regarding the United States debt ceiling amid mid-tier US data. Expectations surrounding the US Federal Reserve (Fed) interest rates outlook are taking a backseat as market attention remains on US debt ceiling developments. This will likely continue to drive overall risk sentiment, affecting US Dollar valuations and Gold price action.
Traders will also pay attention to mid-tier United States weekly Jobless Claims and Existing Home Sales data as well as speeches by several Fed officials.
Gold price experienced further losses on Wednesday and tested the bullish 50-Daily Moving Average (DMA) support at $1,982. However, Gold price managed to close above this level, encouraging buyers to stage a comeback early Thursday.
The 14-day Relative Strength Index (RSI) has changed its downward direction and become flat, indicating that a Gold price rebound may be on the horizon.
If this happens, Gold bulls could challenge Wednesday’s high of $1,993 and attempt to reclaim the strong resistance at $2,005. This is where the flat 21 DMA and the descending trendline resistance meet.
If Gold price is accepted above this level, it could initiate a significant recovery. An upswing towards the $2,020 static resistance is possible.
On the other hand, if Gold price closes below the 50 DMA cap on a daily basis, it could retest the static support near $1,975. If Gold bears manage to sustain a break below this level, further downside towards the $1,950 psychological level is possible.
Tags: Gold price, 50-Daily Moving Average (DMA), Relative Strength Index (RSI), Gold bulls.
Keywords: Gold price losses, bullish 50-DMA support, Relative Strength Index flattish, Gold price rebound, strong hurdle at $2,005, meaningful recovery for Gold price, static support near $1,975.
