- Gold price rises as US Treasury bond yields fall due to market players’ expectations of the Fed slowing the pace of tightening.
- The US housing market continues to deteriorate, while the CB Consumer Confidence missed estimations on inflation concerns.
- Gold Price Forecast: Buyers need to clear $1668, to test the 50-DMA; failure will pave the way towards $1617.
Gold price advances early in the New York session, up by 0.33% courtesy of falling US Treasury yields, while bonds climb amidst the ongoing narrative in the markets that the US Federal Reserve might slow the pace of its rate hikes. All that said, the US Dollar (USD) weakened, a tailwind for the yellow metal. Therefore, XAU/USD is trading at $1655 a troy ounce at the time of writing.
Fallings US T-bond yields weaken the US Dollar, a tailwind for XAU
The sentiment is upbeat, as shown by global equities trading in the green. As previously mentioned, market players are positioning for a possible Fed pivot, while economic data in the US continues to show further deterioration in the country, which, coupled with high inflation and lower bond yields, boosted gold prices.
On Tuesday, US economic data flashed that the housing market, as shown by housing prices cooling down due to higher mortgage rates, which climbed to almost 7%, as the Fed embarked on a tightening cycle trying to tame inflation. Further data revealed by the Conference Board (CB), reported that Consumer Confidence dropped from 107.8 to 102.%, less than estimates of 105.9, decreasing for the second consecutive month, according to the survey.
Lynn Franco, Senior Director of Economic Indicators at The Conference Board, commented that inflation is the primary concern, with gas and food prices serving as the main drivers. She added that “inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers.”
Aside from this, the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, edges down by 0.88%, down at 111.00, weighed by falling US Treasury yields, as the 10-year rate slips from 4.230% to 4.089%.
XAU/USD Price Forecast: Technical outlook
XAU/USD remains downward biased, as shown by the daily chart, with price action remaining below the 20, 50, 100, and 200-day Exponential Moving Averages (EMAs). Gold unsuccessfully tested the 20-day EMA in the last seven days at around $1668, with prices falling afterward. So a break above the latter is needed to clear the way towards the 50-day EMA at $1690.63. Otherwise, a retest of the MTD low at $1617.30, ahead of $1600, is on the cards.