Amidst the tug of war between the United States Dollar (USD) and US Treasury bond yields, gold prices are attempting to consolidate below the critical $2,000 mark as the trading week commences. With a shift towards a risk-friendly market environment, market participants are closely monitoring the US bond market performance and its implications for the precious metal.
Following a rally on Wall Street and optimistic statements from China’s Premier Li Qiang, the US Dollar Index experienced a minor rebound, albeit remaining near a two-month low. Meanwhile, the 10-year US Treasury bond yields continued their downward trajectory, breaching the significant 4.50% level.
Market analysts emphasize the crucial role of the US bond market in determining gold’s next move, especially considering the upcoming large-scale US bond auctions. Additionally, geopolitical developments in the Middle East and the return of the Fed policymakers are expected to exert further influence on gold prices throughout the week.
Despite multiple attempts to surpass the $2,000 threshold, gold prices have faced resistance, prompting a potential ascending triangle formation on the daily chart. The 14-day Relative Strength Index (RSI) remains above the 50 level, reinforcing the ‘buy-the-dips’ sentiment among investors. Furthermore, the presence of major Simple Moving Averages (SMA) adds to the positive outlook for gold prices.
At present, the focus lies on defending the crucial support level at $1,977, with a potential rebound on the horizon. However, a breach below this level could lead to a retest of the November 1 low at $1,970, followed by a downward movement towards the static support at $1,963 and the psychological level of $1,950.
On the upside, breaking above the $2,000 threshold will be critical in initiating a substantial uptrend, with a significant resistance point around the multi-month high of $2,009. Further upward momentum could encounter a notable contention point at the mid-May high near $2,020, a pivotal level for gold buyers to watch closely in the coming sessions.