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- Gold price pauses its three-day recovery rally amid cautious markets early Tuesday
- US Dollar ticks higher with US Treasury bond yields, as investors keep cheering bets of fewer Fed rate cuts.
- Gold sellers return after facing rejection at the 21-day SMA near $2,025. RSI surrenders the 50 level.
Gold price is trading on the back foot below $2,020 early Tuesday, following a positive start to the week and logging a three-day recovery rally. The Gold price upside seems likely capped by a renewed uptick in the US Dollar and the US Treasury bond yields, as markets brace for a return of the American traders.
Gold price looks to Wednesday’s Fed Minutes for fresh impetus
Risk sentiment remains in a weak spot so far this Tuesday, as investors fail to cheer a bigger-than-expected Loan Prime Rate (LPR) by the People’s Bank of China (PBoC). The Chinese central bank left the one-year LPR unchanged but lowered the five-year mortgage lending rate by a record 25 basis points (bps) from 4.20% to 3.95%. However, a lack of fiscal policy support measures from China leaves markets unimpressed.
Traders also digest the recent fading expectations of early and aggressive Federal Reserve (Fed) rate cuts, in the face of the previous week’s hot US Consumer Price Index (CPI) and Producer Price Index (PPI) data. Markets began this year by pricing six Fed rate cuts, now expecting only three. Markets are currently pricing a 76% chance of a cut in June, according to the CME Group’s Fed Watch Tool. A March Fed rate cut is almost fully priced out.
A downbeat mood combined with delayed Fed rate cut bets continue to support the US Treasury bond yields and the US Dollar at the expense of the non-yielding Gold price.
Gold price now looks forward to Wednesday’s Fed Minutes and US S&P Global business PMI data on Thursday, in the absence of any high-impact US economic data releases on Tuesday. Also, of note remains the earnings result from the American tech-giant Nvidia on Wednesday, as it could have a significant impact on the market sentiment.
In the meantime, some appearances from the Fed officials could help markets reverberate expectations of a delayed Fed policy pivot, influencing the value of the US Dollar and the Gold price.
Gold price technical analysis: Daily chart
Gold price faced rejection at the 21-day Simple Moving Average (SMA), now at $2,023, on a daily closing basis, reviving the selling interest.
The 14-day Relative Strength Index (RSI) snapped its recovery mode and fell back below the midline, suggesting that a pullback toward the $2,000 threshold could be in the offing.
That level could offer a strong support, as the upward-pointing 100-day SMA aligns there.
However, Gold sellers need to crack the previous day’s low of $2,011 before testing rising trendline support at $2,005 and the 100-day SMA at $2,000.
On the upsid, the immediate resistance at the 21-day SMA of $2,023 needs to be taken out in order to resume the recovery toward the 50-day SMA of $2,033.
Acceptance above that level will create fresh buying opportunities in Gold price, targeting the February 7 high of $2,044 and the $2,050 psychological barrier.
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