- Gold Price extends two-day uptrend, sidelined near weekly top of late.
- Pre-ECB, US CPI anxiety joins growth, inflation fears to probe XAUUSD bulls.
- US dollar struggles to keep traction amid hawkish hopes from ECB, yields regain 3.0% mark.
Gold Price grinds higher during the third positive day as the softer US dollar battles the market’s cautious mood ahead of the ECB decision on Thursday. That said, XAUUSD picks up bids near $1,853 heading into the European session.
Market’s anxiety restricts XAUUSD moves
Although the US dollar’s weakness keeps the gold buyers hopeful, indecision before the key data/events keeps the precious metal traders on their toes, probing the two-day uptrend of late. It’s worth noting, however, that the US Treasury yields probe the XAUUSD buyers. While portraying the mood, the S&P 500 Futures remain sluggish at around 4,110 after posting the first daily loss in three the previous day.
Also read: Gold Price Forecast: Benefiting from temporal dollar’s weakness
Gold Price differs from US Treasury yields
US 10-year Treasury yields float around 3.05%, following the previous day’s five basis points (bps) upside to 3.04%. It’s worth noting that the Treasury bond yields are up for the second consecutive week, taking rounds to the one-month high flashed earlier in the week. That said, the Financial Times (FT) came out with the news suggesting increased market participation in bond trading, which in turn suggests further volatility for the gold prices. “Net flows into government bond exchange-traded funds hit a record high in May as deteriorating economic sentiment led investors to batten down the hatches,” said the news.
While tracking the clues favoring the US Treasury yields, broad pessimism surrounding inflation and growth takes the front seat. These fears could be linked to comments from the White House, OECD and the World Bank. On Wednesday, White House spokeswoman Karine Jean-Pierre said they expect the inflation numbers to be released at the end of the week to be elevated. Additionally, the Organisation for Economic Co-operation and Development (OECD) cuts the global growth outlook for 2022 while World Bank (WB) President David Malpass warned that faster-than-expected tightening could recall a debt crisis similar to the one seen in the 1980s.
ECB in focus
ECB President Christine Lagarde
Moving on, today’s monetary policy decision from the European Central Bank (ECB) will be important for gold traders. Following that, Friday’s inflation data from China and the US will be crucial to watch for fresh impulses. “ECB tightening expectations have picked up ahead of tomorrow’s decision. WIRP suggests liftoff July 21 remains fully priced in,” said Brown Brothers Harriman (BBH) in their latest report. Should the ECB policymakers manage to meet hawkish expectations, the gold prices may improve further.
Gold Price technical outlook
Gold Price tracks a three-week-old ascending support line to mark another attempt in crossing the 200-SMA. That said, the higher lows in prices join the highest lows of the RSI (14) to keep buyers overcome the immediate SMA hurdle surrounding $1,856.
Even so, the XAUUSD bulls need validation from the 61.8% Fibonacci retracement of the April 29 to May 16 downturn, around $1,870, to retake control.
Meanwhile, a downside break of the aforementioned support line, near $1,841, could witness multiple hurdles around $1,830 and $1,820 before testing the $1,807 support level, the last defense for gold buyers.
Following that, the precious metal becomes vulnerable to slump toward the previous monthly low of $1,786.