Gold price is rebounding firmly toward the $2,200 threshold in Monday’s Asian trading so far, as the US Dollar recovery takes a breather amid sluggish US Treasury bond yields and a mixed market mood.
Gold price capitalizes on US Dollar pullback
The US Dollar is retreating from a five-week high of 104.50 against its major rivals, in the wake of a renewed selling in the USD/JPY pair and a stronger-than-expected Chinese Yuan fix. The latest leg down in the Greenback is helping Gold price regain its lost footing.
USD/JPY corrects further from year-to-date (YTD) highs of 151.86 set on Friday, as the Japanese Yen draws support from mounting risks over a potential forex market intervention by Japan’s authorities.
Meanwhile, the People’s Bank of China (PBOC) set the USD/CNY reference rate at 7.0996, as against the Reuters estimate of 7.2267. Additionally, reports that Chinese authorities have intervened by selling USD/CNY to support the Yuan seem to contribute to the renewed US Dollar weakness.
Gold price, thus, snaps its two-day corrective decline from the fresh all-time high of $2,223, awaiting fresh catalysts for the resumption of the uptrend.
The US Dollar staged a solid comeback in the latter part of the previous week after falling hard alongside the US Treasury bond yields on the dovish US Federal Reserve (Fed) interest rate outlook.
The Fed’s economic projections, the so-called Dot Plot chart, still predicted three rate cuts this year as seen in January. Markets had begun pricing two Fed rate cuts this year after two consecutive months of higher inflation readings. The Fed kept the key rates unchanged between the 5.25% to 5.50% target range, following the March policy meeting.
Markets are now pricing in a 75% probability that the Fed will begin easing in June, up from 59% pre-Fed decision, according to the CME Group’s FedWatch Tool.
The central focus this week remains on the speeches from the Fed policymakers and the Core PCE Price Index data, as the US economic docket remains relatively light in terms of high-impact releases.
In the meantime, the broader market sentiment and the US Dollar dynamics will continue to play their part in the Gold price action.
Gold price technical analysis: Daily chart
With a Bull Flag in play, Gold price remains on track to test the measured target at $2,251 should buyers regain control.
At first, Gold price needs to recapture the $2,200 threshold, following the record high at $2,223.
The 14-day Relative Strength Index (RSI), is seeing a fresh uptick while within the positive territory, indicating more upside on the cards.
On the flip side, immediate support is seen at the previous day’s low of $2,157, below which the Bull Flag resistance at $2,150 will be challenged.
A sustained move below the latter will put the Bull Flag support of $2,140 at risk.
Source: Fxstreet
