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  • Gold remains steady after Fed, boosted by fears of rising inflation
  • Eyes turn to EZ and US PMI for the last trading day of the week.  
  • Technically, the price is supported by the hourly structure.  

Update: Gold (XAU/USD) trims intraday losses following its U-turn from $1,870.44, down 0.05% around $1,876.30 by the press time of pre-European session trading. Gold buyers seem to recollect Thursday’s upbeat sentiment ahead of the key PMI releases from Eurozone, the UK and the US after a light calendar and dead news feed during Asia. While portraying the mood, stock futures print mild gains while the US dollar index (DXY) remains pressured, which in turn helps gold prices to pick up bids of late.

Moving on, preliminary readings of the May month PMIs will be the key gold traders as markets await Eurozone’s strong recovery moves, backed by recently escalating vaccinations. In the absence of which the US dollar can have an opportunity to consolidate the latest losses, also exert downside pressure on the gold prices.

 

The gold price on Thursday at $1,877.00,  has ended the day below its highs around 0.4% up having travelled between a low of $1,863.95 and $1,883.98.

Global equities were stronger  and there was  stabilisation in crypto which sent the US dollar lower as yields sank  as market fears of tapering have cooled upon deeper thought. Fewer initial jobless claims were also taken into account.  

The yield on the US 10-year note fell 3.8bps to 1.634%, but,  all in all, it was a US dollar story on the day once again.

The greenback  retreated hovering near a multi-month low as a risk-on rally drew investors away from the safe-haven currency.

Gold responded in kind as the Us dollar reversed Wednesday’s bounce that had come of the US  Federal Reserve’s most recent monetary policy meeting’s minutes.

The minutes showed that several policymakers said discussions on tapering of government bond purchases would be appropriate “at some point” should economic recovery continue to gather steam.

The surprise was in stark contrast to numerous Fed reassurances that it is too soon to tighten its accommodative policy or think about thinking about tapering.  

”Ultimately, the taper looms large for gold with angst also growing in rates markets, as participants eye the massive Treasury supply on the horizon, particularly as the Biden Administration pushes through with their large fiscal plan,”  analysts at TD Securities said.  

”With investors sounding the alarm over inflation, institutional interest in the precious metals complex is likely to continue rising following months of outflows, providing an offsetting force against taper fears,” the analysts argued.  

”Ultimately, our rates strategists also caution that it is still too early for taper talk, which suggests gold bugs are likely to benefit from the ongoing increase inflows for the time being.”

Looking ahead,  attention is now focused on the  preliminary US and eurozone  May PMI data.

”We expect the service sector will lead gains in Europe, underpinned by the improved vaccination programme and gradual easing in restrictions in the euro area,” analysts at ANZ Bank said.  

‘By contrast, the analysts said ”the PMI for the US is expected to ease slightly, implying growth momentum is in the euro’s favour at present.”

Gold technical analysis

The hourly chart shows the price has met the resistance of the 50% mean reversion area after finding support prior highs.  

Previous updates

Update: Gold price is on the back foot so far this Friday, having faced rejection once again below $1890 levels. The bearish undertone in the US dollar and the Treasury yields is unable to motivate the gold price, as markets continue to weigh in the chances of the Fed’s tapering. Meanwhile, mixed Asian equities fail to offer any support to gold prices. Gold price feels the pull of gravity amid stabilizing conditions across the crypto board after Wednesday’s bloodbath. Investors scurried towards the traditional safe-haven gold in times of uncertainty and market turmoil. Gold traders now look forward to a fresh batch of second-tier economic data, as it remains on track to book the third straight weekly gain.

Update: Gold (XAU/USD) prints mild losses while bouncing off the intraday low around $1,874, down 0.10% on a day to $1,875.40, during Friday’s Asian session. In doing so, the gold traders consolidate gains earned in the last six days while also ignoring the upbeat market sentiment that earlier favored the bulls.

Gold buyers earlier cheered upbeat US data and chatters over the ceasefire in Gaza. However, a lack of any major data/events pushed traders to recollect the FOMC minutes that probed gold by the Fed tapering signals.

Moving on, the preliminary readings of May month activity numbers will be the key to watch gold traders while keeping their eyes on the risk catalysts.

 

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