Gold prices stabilizes ahead of eventful US week

The US dollar and Treasury yields continue to rise without affecting the value of gold. Mixed data on US manufacturing: For the third straight month, the S&P PMI rises while the ISM PMI falls. The US 10-year Treasury yield rises by about 9 basis points to 4.489%, supporting the dollar’s increase.

Gold prices are not changed on Monday even though the dollar registers minuscule gains propelled by elevated US Treasury bond yields, following a release of softer-than-expected US economic data. Along with a shortened week in observance of Independence Day in the States and an eventful week, keeps the XAU/USD trading within familiar levels at around $2,327 flat.

The US economy revealed business activity figures on the manufacturing front, with mixed readings. The S&P Global Manufacturing PMI stood at expansionary territory, contrary to the ISM one, which contracted for the third straight month in June.

Market participants remained cautious, with US equity indices performing mixed in the mid-North American session. Meanwhile, the US 10-year Treasury yield rose almost nine basis points to 4.489%, lending a lifeline to the Dollar, down 0.33% earlier in the day before staging a comeback, gaining 0.09%.

Traders are eyeing the Federal Reserve Chairman Jerome Powell’s speech on Tuesday, followed by the Fed’s latest monetary policy minutes on Wednesday. After that, the US economic schedule will feature Services PMIs from S&P and the ISM, followed by Friday’s US Nonfarm Payrolls.

June’s US S&P Global Manufacturing PMI was 51.6, slightly higher than the previous month but missing the forecast of 51.7. ISM Manufacturing PMI for June was 48.5, lower than the estimates of 49.1 and down from May’s 48.7.

Odds for a 25-basis-point Fed rate cut in September are at 59.5%, up from 58.2% last Friday. The December 2024 fed funds rate futures contract implies that the Fed will ease policy by just 35 basis points (bps) toward the end of the year.

Technical Outlook:

Gold price remains upward biased, though consolidated near the Head-and-Shoulders neckline, at around $2,320-$2,350. Although the bearish chart pattern remains in play, momentum shifted neutral, with the Relative Strength Index (RSI) bracing to its 50-neutral line, hinting that neither buyers nor sellers are in control.

For a bearish continuation, sellers need to push prices below $2,300. Once done, the next support would be the May 3 low of $2,277, followed by the March 21 high of $2,222. Further losses lie underneath, with sellers eyeing the Head-and-Shoulders chart pattern objective from $2,170 to $2,160.

On the other hand, if buyers stepped in and conquered $2,350, that would expose additional key resistance levels like the June 7 cycle high of $2,387, ahead of challenging the $2,400 figure.