Gold Price Loses Steam

Gold rose in Tuesday morning trading in Asia. The dollar also rose and stabilized after falling during the previous session, which pushed the yellow metal to the highest point in two weeks.

Gold futures rose 0.17% to $1,850.94 by 11:10 PM ET, after hitting their highest since May 9 at $1,865.29 on Monday.

On Monday, Spot gold peaked at $1,865.38 a troy ounce, but the rally lost steam after Wall Street’s open, now trading at around $1,851. The optimistic tone of equities undermines demand for the safe-haven metal, while the greenback remains out of investors’ radar.

The dollar, which usually moves in reverse with gold, rose on Tuesday after falling to a one-month low in the previous session. The benchmark 10-year US Treasury yields also fell.

Esther George, President of the Federal Reserve Bank of Kansas City, said Monday that the US Federal Reserve may raise its target interest rate to around 2% by August 2022, with further action depending on how both supply and demand affect inflation.

Investors are now awaiting the minutes of the Federal Reserve’s latest meeting scheduled for Wednesday. The Reserve Bank of New Zealand will also release its policy decision on the same day, and the Bank of Korea will follow on Thursday.

Gold Price kept its bullish undertone intact, starting out a fresh week, reaching new nine-day highs at $1,885 before returning to modestly higher at $1,854. However, the volatility surrounding the gold price action from the previous week continued as the dynamics of the US Treasury yields played their part.

What also worked in favor of Gold Price was the renewed tensions between the US and China over Taiwan after American President Joe Biden said Monday that the US may get involved militarily to defend Taiwan. In response, China’s Foreign Ministry warned the US not to underestimate its resolve on Taiwan. The geopolitical tensions likely underpinned the traditional safety bet gold.

Attention now turns towards the Manufacturing and Services PMIs preliminary readings, which will provide fresh hints on a potential recession threat. The data releases could impact the market sentiment and, thus, the dollar and gold valuations. Besides, markets will be mindful of Wednesday’s FOMC minutes release before placing any aggressive bets on the yellow metal.

Gold daily chart shows that the latest advance could have been just corrective. However, technical indicators recovered from near oversold readings to turn flat within negative levels, indicating decreasing buying interest. Also, the 20 SMA maintains its bearish slope above the current level, providing dynamic resistance.