- A change in US bond yields, with the 10-year note coupon falling from a 16-year high of 4.51% to 4.44%, is what is driving gold prices’ recovery, which has seen gains of 0.25%.
- Federal Reserve officials expressed a cautious stance, emphasizing the need for patience despite the necessity for further rate hikes to control inflation.
- The US Dollar Index (DXY) continues to print modest gains, sitting at 105.56, potentially impacting gold’s rally.
- Next week, US data includes consumer confidence, durable goods orders, and initial jobless claims to provide further direction.
Gold The gold price recovered some ground after hitting a weekly low of $1913.99, though it remains shy of breaking solid resistance at around the 50-day moving average (DMA) at $1929.79. Factors like dropping US T-bond yields and upbeat market sentiment drove the XAU/USD’s price toward the current spot at $1924.56, achieving gains of 0.25%.
The gold price nudges upwards despite a firm US Dollar
The reversal in US bond yields is what is driving up XAU/USD prices. The US 10-year benchmark note coupon reversed from a 16-year high of 4.51% towards 4.44%. Consequently, US real yields are edging lower by five basis points, from 2.11% to 2.06%.
Susan Collins and Mary Daly, the presidents of the Boston and San Francisco Federal Reserves, respectively, turned cautious in the interim and emphasized that even though inflation is slowing down and more rate hikes are likely to be necessary, the Fed must exercise patience. Fed Governor Michelle Bowman commented that more increases are needed to control inflation.
Data-wise, S&P Global announced the final PMI readings in the United States (US). Manufacturing PMI improved to 48.9 but stood in recessionary territory. Contrarily, services, and composite PMI showed signs of losing steam, though they expanded but continued to aim towards the 50 expansion/contraction threshold.
Meanwhile, the US Dollar Index points to modest gains of 0.17%, stalling gold’s rally. The DXY sits at 105.56, set to print solid gains for the tenth straight week.
On the US front, consumer confidence, durable goods orders, initial jobless claims, and the Fed’s preferred gauge for inflation are the core PCEs.
XAU/USD Price Analysis: Technical outlook
From a technical standpoint, the XAU/USD is set to continue to trade sideways within the $1913–$1948 range, with most daily moving averages (DMAs) hovering around the current exchange rate. However, as the yellow metal remains below the 200-DMA, which sits at $1926.24, the path of least resistance is tilted to the downside. The September 14 $1901.11 swing low would be the second support after the September 21 low of $1913.99. Conversely, if the non-yielding metal surpasses the 100-DMA at $1941.86, a challenge to the $1950 mark is expected.
