Gold Faces Downward Pressure Amid US Treasury Yield Rise and Dollar Strength

GOLD prices experienced a notable dip to their lowest in over a week on Wednesday, influenced by an increase in US Treasury bond yields and a stronger US Dollar. The downturn was somewhat mitigated following the Federal Open Market Committee (FOMC) meeting minutes, which suggested inflation was under control, potentially reducing the need for overly restrictive monetary policies.

Despite this reassurance, the minutes offered no specific insights on the timing of potential Federal Reserve rate cuts. Richmond Fed President Thomas Barkin’s comments indicating the possibility of further rate hikes added to the upward momentum in bond yields, consequently limiting the downside for the Dollar and capping potential gains for gold.

Investors are now looking for more definitive guidance on the Fed’s policy direction, with attention focused on the upcoming Nonfarm Payrolls (NFP) report. Short-term opportunities may arise from Thursday’s US economic data, including the ADP employment report and Initial Jobless Claims.

However, uncertainties around early Fed rate cuts might deter aggressive bullish bets on GOLD , suggesting that traders should exercise caution before concluding that the recent downtrend has ended.Gold’s recent uptick, influenced by bets on a potential March rate cut and ongoing geopolitical tensions, faces challenges from steadying US bond yields below 4.0%.

The December FOMC minutes indicated that rates might be nearing their peak, with members observing progress in inflation control but acknowledging the possibility of maintaining current interest rates longer than anticipated. Richmond Fed President Barkin’s confidence in a soft landing for the economy, coupled with open considerations for further rate hikes, adds to the complexity of predicting gold’s near-term trajectory.

The market now anticipates the US ADP report, expected to show a slight increase in private-sector job additions in December, with the Nonfarm Payrolls report being the key focus for clearer market direction.

Gold Technical Outlook

Gold’s technical analysis shows a bearish trend, with the price closing below the 2046.50 level. This movement suggests a continuation of the bearish trend towards a target of 2016.90. The price is currently testing a previously broken resistance line at 2046.50, influenced by stochastic positivity.

However, the 50-Day Exponential Moving Average (EMA50) exerts negative pressure, supporting the likelihood of the bearish trend resuming.

The bearish outlook will persist unless there is a rally breaching 2065.70 and sustaining above it. Today’s expected trading range is between 2020.00 support and 2060.00 resistance, with the trend leaning towards bearish.

Gold Live Chart