- Gold price enters a bearish consolidation phase near a multi-month low touched on Wednesday.
- The prevalent risk-off environment is seen lending some support to the safe-haven XAU/USD.
- Bullish USD and elevated US Treasury bond yields should keep a lid on any attempted recovery.
Gold price (XAU/USD) entered a bearish consolidation phase on Thursday and oscillated in a narrow trading band near its lowest level in more than six months touched the previous day. The prevalent risk-off environment, amid worries about China’s ailing property sector and a looming US government shutdown, turns out to be a key factor lending some support to the safe-haven precious metal. Furthermore, retreating US Treasury bond yields hold back the US Dollar (USD) bulls from placing aggressive bets, especially after the recent runup to the highest level since November 2022, and lends some support to the commodity.
Any meaningful recovery for the Gold price, however, remains elusive in the wake of rising bets for further policy tightening by the Federal Reserve (Fed), which should act as a tailwind for the USD and the US bond yields. Traders might also prefer to wait on the sidelines ahead of the US Core PCE Price Index on Friday, which will provide fresh cues about the Fed’s future rate-hike path and provide a fresh directional impetus to the non-yielding yellow metal. In the meantime, Thursday’s release of the final US Q2 GDP print and the Weekly Initial Jobless Claims might influence the USD later during the early North American session. Apart from this, the broader risk sentiment might contribute to producing short-term trading opportunities.
Daily Digest Market Movers: Gold price consolidates its recent losses to a more than six-month low
- Gold price registered its biggest single-day fall in two months amid stronger US Dollar and surging US bond yields.
- Investors remain worried about China’s property sector and headwinds stemming from rapidly rising borrowing costs.
- Republican US House Speaker Kevin McCarthy on Wednesday rejected a stopgap funding bill advancing in the Senate.
- This brings the US government closer to its fourth partial shutdown in a decade and takes its toll on the risk sentiment.
- Hawkish comments by Minneapolis Fed President Neel Kashkari lift bets for at least one more rate hike by the year-end.
- The better-than-expected US Durable Goods Orders data ensures that the Fed will keep interest rates higher for longer.
- Thursday’s US economic docket features the release of the final US Q2 GDP and the usual Weekly Initial Jobless Claims.
- The US Core PCE Price Index, due on Friday remains in focus for cues about the Fed’s future interest rate-hike path.
Technical Analysis: Gold price finds some support amid oversold conditions; remains vulnerable
From a technical perspective, the Relative Strength Index (RSI) on the daily chart has just started drifting in the oversold zone and helps limit the downside for the Gold price. The subdued range-bound price action, meanwhile, might still be categorized as a bearish consolidation phase and the lack of any buying interest suggests that the path of least resistance for the XAU/USD is to the downside. However, it will be prudent to wait for some near-term consolidation or a modest rebound before positioning for a further depreciating move. Nevertheless, the XAU/USD remains vulnerable to prolong its downward trajectory towards the next relevant support near the $1,860-1,858 region en route to the $1,820 level.