Search ForexCrunch
  • Gold steadies above $1,900 in the American session on Wednesday.
  • 10-year US Treasury bond yield is down more than 1%.
  • US Bureau of Labor Statistics will release May jobs report on Friday.

Gold spiked to its highest level since early January at $1,916 on Tuesday but ended up closing the day near $1,900 with a daily loss of 0.35%. Although the XAU/USD pair spent the first half of the day in a relatively tight range below $1,900, it managed to regain its traction during the American trading hours and was last seen rising 0.36% on the day at $1,907.

Gold finds support as US T-bond yields turn south

In the absence of high-tier macroeconomic data releases and significant fundamental developments, US Treasury bond yields’ movements continue to impact gold’s performance. On Tuesday, the benchmark 10-year US T-bond yield gained nearly 2% but reversed its direction on Wednesday, paving the way for a recovery in XAU/USD. At the moment, the 10-year US T-bond yield is down 0.9% on the day at 1.594%.

The only data from the US showed that the IBD/TIPP Economic Optimism Index improved to 56.4 in June from 54.4. Meanwhile,  Philadelphia Fed President Patrick Harker said that price hikes in the US are expected in the short run because of supply and production issues.  “Fed knows how to deal with inflation being above where they want it to be,” Harker added, downplaying inflation concerns.

Nevertheless, investors seem to be opting out to remain on the sidelines while waiting for the US Bureau of Labor Statistics to publish May’s job report on Friday. On Thursday, the weekly Initial Jobless Claims data, the ADP Employment Change and the ISM Services PMI will be featured in the US economic docket. On Tuesday, the ISM Manufacturing PMI report revealed that input prices in the manufacturing sector continued to increase at an unprecedented pace in May and a similar situation in the service sector could help US T-bond yields turn north and limit gold’s upside.

Related articles

Gold Price Analysis: XAU/USD battles support, eyes $1,1913 – Confluence Detector.

“The Technical Confluences Detector is showing that XAU/USD has strong support at $1,903, which is the convergence of the Bollinger Band 4h-Middle, the Fibonacci 23.6% one-week, the BB 1h-Upper and more,” notes FXStreet analyst Yohay Elam.

Gold Price Analysis: XAU/USD set to plummet until the $1794 mark – Commerzbank.

Gold has charted a key day reversal as the yellow metal is seeing some profit-taking.  Subsequently, XAU/USD is expected to correct lower short-term, in the opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank.