- Gold price ignores US Dollar recovery to rise ahead of the key United States data.
- First Republic Bank earnings, US debt ceiling drama propel risk aversion and XAU/USD price.
- US Treasury bond yields, Durable Goods Orders should be watched for intraday direction of the Gold price.
- US GDP, Federal Reserve’s favourite inflation gauge appears the key ahead of next week’s Federal Open Market Committee (FOMC).
Gold price (XAU/USD) stays on the front foot around $2,000 during a three-day winning streak amid early Wednesday. In doing so, the bright metal benefits from the risk aversion wave, mainly led by the fresh banking fears and woes surrounding the United States debt ceiling expiration, as well as the Federal Reserve’s (Fed) policy pivot. It’s worth noting that the XAU/USD run-up pays little heed to the US Dollar’s recent recovery ahead of the US Durable Goods Orders for March.
Gold price rises on sour sentiment, ignores US Dollar rebound
Gold price rises for the third consecutive day inside a one-month-old bullish trend channel as downbeat sentiment provides a tailwind to the XAU/USD’s haven demand.
Fresh fears of banking fallouts and US default weighed on the market sentiment and allowed the Gold Price to remain firmer amid a risk-off mood. However, the cautious mood ahead of today’s US Durable Goods Orders for March and major central banks’ efforts to restore the market’s confidence seems to challenge the XAU/USD buyers of late.
On Tuesday, the First Republic Bank’s (FRB) disappointing earnings reports joined the executives’ resistance in taking questions and no earnings guidance to trigger a fresh wave of banking jitters. Even so, the major central banks tried to restore market confidence by curtailing the US Dollar operations initiated during the first wave of the banking crisis. “The world's top central banks are cutting the frequency of their dollar liquidity operations with the U.S. Federal Reserve from May, sending the clearest signal yet that last month's financial market volatility is essentially over,” said Reuters.
Apart from the banking crisis, fears of US debt ceiling expiration also weigh on the risk appetite as the current limit expires in June. That said, US Treasury Secretary Janet Yellen warned that failure by Congress to raise the government's debt ceiling–and the resulting default–would trigger an “economic catastrophe” that would send interest rates higher for years to come, per Reuters.
Against this backdrop, Wall Street closed in the red and the US Treasury bond yields were down too, which in turn allowed the US Dollar Index (DXY) to snap a three-day downtrend.
Unimpressive United States data adds strength to XAU/USD
Apart from the risk aversion, the mixed United States economics also propel the Gold price. That said, US Conference Board's Consumer Confidence Index edged lower to 101.3 for April, versus 104.0 prior and Additional details of the publication stated that the Present Situation Index ticked up to 151.1 during the said month from 148.9 prior whereas the Consumer Expectations Index dropped to 68.1 from 74 previous readings. Further, the one-year consumer inflation expectations eased to 6.2% in April from 6.3% in March. In a different release, the US New Home Sales rose to 0.683M MoM in March versus 0.634 expected and 0.623M revised prior while the S&P/Case-Shiller Home Price Indices and Housing Price Index both rose past market forecast to 0.4% and 0.5% respectively for February.
Looking forward, sour sentiment and the downbeat United States Treasury bond yields can keep the Gold price firmer ahead of the US Durable Goods Orders for March, 0.8% expected and -1.0% prior.
Gold price technical analysis
Gold price rebounds from a lower line of the one-month-old ascending trend channel bullish formation, recently crossing the 21-DMA of late.
In addition to the break of the 21-DMA hurdle, currently around $1,997, mostly steady Relative Strength Index (RSI) line, placed at 14, adds strength to the bullish bias as it stays near the 50.0 level.
However, the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator lure the XAU/USD sellers amid risk aversion.
That said, the $2,000 round figure and the recent top surrounding $2,050 may check the XAU/USD buyers before directing them to the aforementioned channel’s upper line, close to $2,055 at the latest.
Meanwhile, Gold bears need validation from the stated channel’s lower line, close to $1,983 by the press time to retake control.
Even so, February’s high of around $1,960 and the 50-DMA level near $1,925 can prod the Gold price declines. It’s worth noting that a rising trend line from November 2022, near $1,885, acts as the last defense of the XAU/USD bulls.
Overall, Gold price is likely to rise further but the road towards the north appears bumpy.
Gold price: Daily chart
Trend: Further downside expected
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