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Gold Price Consolidates Under Bearish Pressure as US Treasuries Rally Supports USD

The price of Gold has been facing bearish pressure recently, with the precious metal consolidating under a bearish trend. This dip comes after it hit a high of $1,914-$1,915, its highest since February. The intraday falls have led to a two-day decline, with XAU/USD hovering around the $1,885 mark.

Despite recent US banking chaos and political turmoil, market attention has been focused on the Federal Reserve’s upcoming policy meeting on March 22. Expectations of a 0.25% rate hike have driven market sentiment, but Tuesday’s latest Consumer Price Index (CPI) report has raised concerns about inflation.

The report indicates that inflation is not on a downward trend, which has negatively impacted the price of Gold. The CPI report is a key factor affecting the gold market as it signals a potential inflationary impact on the US economy. If inflation rises, the Federal Reserve may increase interest rates to keep it under control.

However, higher interest rates would lead to a stronger dollar, which would negatively impact the price of Gold. As a result, investors have been cautious and have turned to the dollar and other safe-haven assets instead of Gold. Furthermore, the rising bond yields have also been affecting the price of Gold.

US Treasuries Rally Supports USD

The rally in US treasuries is providing key support for the USD, contributing to gold prices remaining in the red zone. A positive risk tone has also emerged, with fears of a broad market decline due to the collapse of the SVB denting the demand for safe-haven precious metals.

Market participants are now pricing the possibility of the ECB increasing rate hikes even past the March meeting, due Thursday. The BoE is also anticipated to stick to its tightening policy, with some analysts predicting that the bank may pause its hawkish stance.

This stance suggests that the recent rally in the precious metal may have continued and is now favoring the bears. For Gold to avoid further losses, it will be crucial for gold prices to trade below the $1880 resistance breaking point before bracing for any more losses.

Traders will also monitor the US economic sector, seeing the Producer Price Index, monthly retail sales figures, and the Empire State Manufacturing Index. This data, coupled with US yields, the USD price movement, and the wider market risk sentiment, should provide traders with a fresh impetus.

Technical Indicators Suggest Resistance

The technical indicators at the $1889 level have moved into a shield for the immediate downside in the price of Gold. If the pair can break and convincingly move above this technical selling point, it could drag them toward the next best support level in the $1855 region.

On the other hand, if sellers maintain their momentum, this will expose the 100 SMA support at the $1817 level, triggering a massive gain for the bears. On the other hand, the weekly swing high currently hovering around the $1915 region is the next best resistance.

Bulls are now waiting for a move above this barrier before they can move into a position to take advantage of the resurgence seen in the past week. After that, the metal’s price might gain momentum and attempt to target the ten-month high found at the $1959 level, which the metal was able to touch in January.

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