- Summary:
- Gold prices are benefiting from the falling US Treasury yields, but could come under pressure when key US economic data comes out later.
Gold has reversed some of the losses incurred on Wednesday, as traders react to declining US Treasury yields. Gold prices at the futures market were at $2,007.9 an ounce at 11.20 UTC on Thursday, having inched up 0.17%. Similarly, spot gold price gained +0.21% to trade at $1996.465 an ounce. Yields on 10-year US Treasuries have climbed down from 4.31% on Tuesday to 4.27% on Wednesday and stood at 4.23% at the time of writing.
The cooling US treasury yields have provided gold with some tailwinds, even as the latest US inflation figures seem to have confirmed that the Fed will retain high interest rates beyond April. The commodity will, however, have to contend with swings in the strength of the dollar later on Thursday. The DXY dollar index has slipped from near three-month highs over the last two trading sessions but still holds on to above the 104.00 mark.
What could change?
Immediate focus will be on the US Initial Jobless Claims and Retail Sales Data, which will provide a clearer picture of the state of the US economy following the CPI release. These figures will come out later on Thursday, and will impact the market’s sentiment around the US dollar. Furthermore, the demand for the greenback is expected to rise when China’s economy opens up after a week-long Lunar New Year Holiday break.
For gold prices, however, Japan’s weak GDP printout, China’s underperforming economy and a flare-up in the Israel-Hamas war could bring inflows from investors seeking its safe-haven cushion.
Technical analysis
Gold price will likely find a pivot at 1,988, but will need to stay above the first support at 1,985 to stand a chance of building upside momentum. If, however, it breaks below 1,985, look for further downward action towards the second support at 1,975. Alternatively, price action above 1998 could build upside momentum to test the first resistance at 2,003, beyond which the bulls could test the next upper target at 2,012.
Gold price on a 30-minute chart