(Valeria Bednarik – FXStreet)
XAUUSD Current price: $1,776.75
– US Treasury yields are on the rise, weighing on spot gold.
– Substantial gains in US stock indexes limit the dollar’s strength in the American session.
– XAUUSD keeps losing its bullish potential, despite a dismal ruling mood.
Spot gold remains under selling pressure, trading around $1,775 a troy ounce. The greenback maintained its strong footing throughout the first half of the day as market players remain cautious amid recession concerns.
Demand for the American dollar receded after Wall Street’s opening, as the DJIA and the S&P 500 opened with substantial gains, extending their rallies at the time being. The Nasdaq Composite lags as it trades a handful of points below its opening level. In the case of XAUUSD, it was barely enough to halt the slump, although it did not help gold to bounce back, somehow hinting at further slides in the upcoming sessions.
Meanwhile, US government bond yields are rising, making the bright metal less attractive. The 10-year Treasury note currently yields 2.83%, while the 2-year note yield stands at 3.24%. The yield curve remains inverted, but the distance shrank to 41 bps from the record peak of 65 reached after the release of US inflation figures.
Gold price short-term technical outlook
XAUUSD’s daily chart shows that buying interest keeps easing. The pair has posted a lower low and a lower high, approaching a bullish 20 SMA, which provides dynamic support at around $1,761.10. The 100 SMA, in the meantime, accelerated its slide above the current level after crossing below the 200 SMA. Finally, technical indicators maintain their downward slopes, although holding above their midlines.
The 4-hour chart offers a neutral-to-bearish stance. The 100 SMA advances below the current level, although losing its upward strength, while the 20 SMA gains downward momentum above the price. Technical indicators remain directionless below their midlines, reflecting the absence of buying interest while skewing the risk to the downside.
Support levels: 1,761.10 1,754.25 1,742.50
Resistance levels: 1,783.10 1,792.30 1,803.10