- Gold is pressing higher as the US dollar falls away weighed by sinking US yields.
- Eyes turn to EZ and US PMI for the last trading day of the week.
- Technically, the price is supported by the hourly structure.
The gold price on Thursday at $1,877.00, has ended the day below its highs around 0.4% up having travelled between a low of $1,863.95 and $1,883.98.
Global equities were stronger and there was stabilisation in crypto which sent the US dollar lower as yields sank as market fears of tapering have cooled upon deeper thought. Fewer initial jobless claims were also taken into account.
The yield on the US 10-year note fell 3.8bps to 1.634%, but, all in all, it was a US dollar story on the day once again.
The greenback retreated hovering near a multi-month low as a risk-on rally drew investors away from the safe-haven currency.
Gold responded in kind as the Us dollar reversed Wednesday’s bounce that had come of the US Federal Reserve’s most recent monetary policy meeting’s minutes.
The minutes showed that several policymakers said discussions on tapering of government bond purchases would be appropriate “at some point” should economic recovery continue to gather steam.
The surprise was in stark contrast to numerous Fed reassurances that it is too soon to tighten its accommodative policy or think about thinking about tapering.
”Ultimately, the taper looms large for gold with angst also growing in rates markets, as participants eye the massive Treasury supply on the horizon, particularly as the Biden Administration pushes through with their large fiscal plan,” analysts at TD Securities said.
”With investors sounding the alarm over inflation, institutional interest in the precious metals complex is likely to continue rising following months of outflows, providing an offsetting force against taper fears,” the analysts argued.
”Ultimately, our rates strategists also caution that it is still too early for taper talk, which suggests gold bugs are likely to benefit from the ongoing increase inflows for the time being.”
Looking ahead, attention is now focused on the preliminary US and eurozone May PMI data.
”We expect the service sector will lead gains in Europe, underpinned by the improved vaccination programme and gradual easing in restrictions in the euro area,” analysts at ANZ Bank said.
‘By contrast, the analysts said ”the PMI for the US is expected to ease slightly, implying growth momentum is in the euro’s favour at present.”
Gold technical analysis
The hourly chart shows the price has met the resistance of the 50% mean reversion area after finding support prior highs.