Gold Supported at $1850, Bullish Correction Looms – FX Leaders
Gold (XAU/USD) prices flip around the short-term key horizontal support area near $1,850 as market sentiment dwindles during early Tuesday, having dropped the most in a week. Nonetheless, the yellow metal GOLD remains on the bear’s radar due to concerns about inflation and growth and the quote’s first daily close below the 200-day EMA since late January.
Although US stock futures were down half a percent by press time, a drop in Treasury yields appeared to have probed recent market pessimism. However, US 10-year Treasury yields have fallen back to sub-3% levels after reaching a new high in November 2018, the day before.
What’s Affecting Gold Prices?
Mixed comments from Fed policymakers may have weighed on Treasury yields recently. However, Richmond Fed President Thomas Barkin maintained the 75 basis point rate hike, while Atlanta Fed President Robert Bostic advocated for 50 basis point rate increases.
Comments from China’s Vice Premier Liu He, who reiterates the country’s dynamic covid zero policy, are also likely to have probed gold’s further downside.
It’s worth noting that rising concerns about economic growth, as rising inflation forces central bankers to tighten monetary policies, appeared to have exhibited a stellar display of risk aversion on Monday. Worsening living conditions in China and Russia’s ignorance of global outrage over the invasion of Ukraine exacerbated the gloomy mood.
Looking ahead, gold traders should keep an eye out for risk catalysts for a new surge ahead of the US Consumer Price Index (CPI) data for April on Wednesday.
Gold Technical Outlook
Gold price resumes its negative trading to move below the bearish channel’s resistance that appears on the chart, and the way is open to achieve our much awaited target of 1850, noting that the continuation of the bearish wave requires holding below 1890.
Today’s trading range is expected to be between 1850 support and 1890 resistance.