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Gold Trims Losses After Hitting 10-Week Low

ByAlex Boltyan
Published 05/30/2023, 12:20 PM
Updated 07/09/2023, 06:32 AM

Gold price has managed to recover some ground during the New York session on Tuesday, after hitting a two-and-a-half-month low of $1,932 an ounce, as US Treasury yields pull back across the curve. Still, the spot price, XAU/USD, remains 0.45% below its opening price, trading at the $1,960/oz area.

Optimism surrounding a debt-ceiling agreement in the United States - which still needs to be approved by Congress - is among key drivers in financial markets as US traders join the trading tables. US Treasury yields are falling sharply, with the 10-year note rate at 3.701%, despite higher expectations the Federal Reserve will embark on another rate hike at the June 14 meeting.

According to the CME FedWatch Tool, swap markets are pricing odds above 60% the Fed will raise by 25 basis points next meeting.

Upcoming US employment data this week, the ADP report on Thursday and nonfarm payrolls on Friday could affect expectations regarding the central bank's decision. The nonfarm payrolls report is expected to show a 180,000 job gain, while the unemployment rate is foreseen to tick up to 3.5%.

XAU/USD Daily Chart
From a technical perspective, the XAU/USD pair holds a short-term neutral bias, according to the daily chart, as indicators offer divergent signals while the price has been moving in a range between the 100- and the 20-day simple moving averages (SMAs) for the last couple of weeks.

A break below the 100-day SMA, which acted as firm support at the $1,930 area on Tuesday, could add pressure on the metal, targeting the $1,900 zone. On the other hand, a recovery above the 20-day SMA at $1,995 could catalyze a steeper rally aiming for a retest of record highs in the $2,075 region.

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