Gold Price Holds Above $1,800 Amid Risk-Off Sentiment

Summary:

Gold price remains under pressure even as it remains above the crucial level of $1,800. The risk sentiment and Treasury yields are key drivers.

Gold price remains under pressure even as it continues to find support at the crucial level of $1,800. On the one hand, the Treasury yields selloff has buoyed up precious metals. After hitting a one-week high of 1.42 on Wednesday last week, the benchmark 10-year yields have since dropped by over 10%. As at 08.20 GMT, the 10-year US bond yields were down by 1.55% at 1.27.

On the other hand, the risk-off sentiment is limiting the upside potential on gold price. Granted, gold and the US dollar are both considered as safe-havens. Indeed, it is one of the aspects that have helped maintained gold price above $1,800. However, if the sentiment worsens in the ensuing sessions, the greenback is likely to strengthen further against its rivals.

At the time of writing, the dollar index was at its highest level since early April at $92.98. Notably, there is no high-impact macro news expected from the US in the new week. As such, the risk sentiment and performance of the US Treasury yields will likely be the key drivers of gold price.

Technical outlook

Gold price is trading lower, even as it remains above the crucial support level of 1,800. At the time of writing, the precious metal was down by 0.27% at 1,807.40. On a two-hour chart, it is trading below the 25 and 50-day exponential moving averages.

In the near term, I expect gold price to trade within a rather tight range between the psychological level of 1,800 and along the 25-day EMA at 1,816.29. However, a move below 1,795 or above 1,820 will invalidate this thesis.