Gold price declines below $1850 on higher Treasury yields

Monday’s gold price decline is caused by rising US Treasury bond yields, which are up 0.49%. US factory orders decreased less than anticipated, but market players paid it little attention. At the time of writing, the price of the precious metal was 1846.62 per ounce, down from its previous closing price of 1855.84.

The testimony by US Fed Chair Jerome Powell before Congress is the main focus of gold traders as they look for cues and signals that can assist them forecast the future course. While UST bond yields gain some ground and turn positive, the gold price declines by 0.26% or $3.00 per ounce during the US trading session.

Prior to next week’s Tuesday inflation report, the US economic calendar would be hectic, highlighted by Fed speakers and employment data.

US stocks are a reflection of the financial markets’ risk-on trend. Many US economic indicators, such as Factory Orders for January, showed a decline of -1.6% rather than the -1.8% MoM predicted. The US Commerce Department’s data indicated increased shipments of manufactured goods, ending two months of declines.

The US Dollar Index (DXY), which fell 0.28% to 104.232, indicates that the US Dollar struggled to gather momentum after the announcement. In contrast, the 10-year US Treasury bond rate is rising.

As market participants got ready for Chairman of the US Federal Reserve (Fed), Jerome Powell, to address the US Congress on March 7 and 8, the price of XAU/USD was likely to stay volatile. Market participants attribute his position as being hawkish, reiterating some of the ideas put forth by his colleagues. Investors anticipate Powell to reaffirm the Fed’s commitment to containing inflation and stress the need for rates to rise for a longer period of time.
XAU/USD traders are keeping a watch on US job data in addition to Jerome Powell’s speech at the congress. More than 500K jobs were added to the economy in the previous month’s US Nonfarm Payrolls report, above predictions of 200K. Market analysts predict that February’s data will rise by only 200K above January’s figures. Positive data would cause the XAU/USD to continue falling.

Once it overcame the 20 and 50-day Exponential Moving Averages, XAU/USD is neutral to upward inclined on the daily chart (EMAs). But, Gold is taking a hit as UST bond yields move upward, falling below the $1850 level. In addition, before turning bearish, the Relative Strength Index (RSI) went over the 50-midline. As a result, the XAU/USD path of least resistance in the immediate term is downward.

The intersection of the 20/50-day EMAs at $1846.00 would serve as gold’s initial support. After being cleared, the XAU/USD would move closer to the daily low of $1835.51 on March 3 before moving towards the 100-day EMA at $1822.15 and the 200-day EMA at $1805.16.