Gold consolidates losses on soaring T-yields

The price of gold is consolidating its losses on Thursday, trading around the $1,930 range after dropping to its lowest level in over a month at $1,929.48 per ounce. The price of the precious metal at the time of writing is $1933.55. The decrease was caused by the US dollar’s continued gain, which profited from a general market downturn that also increased government bond yields and weighed on stocks.

Market participants are worried that the Fed will continue on its tightening path for longer than anticipated due to the chronically tight labour market in the United States (US). The central bank increased its benchmark rate to its highest level in almost 20 years, with a target range of 5.25%-5.50%.

After the meeting, Chairman Jerome Powell reiterated that decisions will be made meeting by meeting, despite the fact that at the last meeting, officials had anticipated two rate hikes of 25 basis points (bps). That implies that the Fed has at least one more rate hike planned. However, when lukewarm signs of the economy turning the corner emerged, market investors started to increase their wagers on an impending stop.

However, the most recent US employment-related data raised doubts. When the July Nonfarm Payrolls Report (NFP) is released on Friday in the US, a more precise picture might become apparent. While the unemployment rate is anticipated to remain constant at 3.6%, the nation is anticipated to have added 205K new jobs in the month.

The risk is still tilted to the downside and the Gold Index is stalled at $1,934.84, which is the 61.8% Fibonacci retracement of its most recent bullish run between $1,902.62 and $1,987.40. The pair continues to trade below the 20 and 100 Simple Moving Averages (SMAs) on the daily chart, posting a lower high and lower low for the third straight day. Technical indicators, meanwhile, have lost some of their bearish vigour but are still pointing downward.

The XAU/USD pair maintains its position below all of its moving averages on the 4-hour chart, with a 20 SMA that is very bearish continuing its drop beneath a directionless 100 SMA. Relative Strength Index (RSI) indicator remains close to oversold area while the Momentum indicator rebounds within negative levels, keeping the risk-skewed trend.

Both gold and silver were down on the global market, at $1,935 per ounce and $23.55 per ounce, respectively. Due to an increase in Treasury yields brought on by news of increased US debt issuance and positive employment market data, Comex gold reached a three-week low.

Due to an increase in Treasury yields brought on by news of more US debt issuance and robust labour market data, gold fell to its lowest level in three weeks. On Thursday, 10-year US bond yields touched their highest level since November.