The gold price has seen a notable decline, primarily influenced by a stronger US Dollar and rising US Treasury bond yields. As investors brace for upcoming US PMI data and potential rate cuts by the Federal Reserve, the market remains volatile. In this article, we will explore the factors behind the gold price movement and the potential implications of the upcoming economic data.
US Dollar Strength
The US Dollar has shown significant strength recently, which has put downward pressure on gold prices. A stronger Dollar makes gold more expensive for holders of other currencies, reducing demand for the precious metal.
Treasury Yields on the Rise
Alongside the Dollar, rising US Treasury bond yields are another factor contributing to the gold price decline. Higher yields raise the cost of holding non-yielding assets such as gold, which intensifies selling pressure.
Upcoming US PMI Data and Its Impact on Gold
The market’s focus now shifts to the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) data. This report, set to be released soon, could provide insight into the US economy’s health. An improvement in PMI data could further boost the US Dollar, potentially extending the gold price decline.
Technical Analysis: Long-Term Gold Price Outlook
Despite the recent decline, the gold price outlook remains positive in the long term. The price is still above the 100-day Exponential Moving Average (EMA), signaling continued upward momentum. The 14-day Relative Strength Index (RSI) also supports this view, as it remains above the midline, indicating that the price may resume its upward trend.
Key resistance for gold lies between $2,530 and $2,540. If the price breaks through this zone, it could rally to the psychological level of $2,600. However, if the price drops below $2,470, it may head towards $2,432 and potentially $2,372, the 100-day EMA.
Conclusion
As traders keep an eye on US economic data and Federal Reserve actions, the gold price will likely remain under pressure in the short term. However, ongoing geopolitical tensions and potential interest rate cuts could provide support to the precious metal in the coming months.
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