Is gold’s comeback difficult amid higher Treasury yields?

In an effort to break a two-day downturn, the price of gold is slightly bid lately. Treasury bond rates rise as a result of easing bank problems, but not all bond bears are siding with XAU/USD bulls.

The hesitation of Federal Reserve policymakers to support rate increases boosts the risk-on environment and discourages gold buyers. US Consumer Confidence is a key indicator for intraday direction for Gold Index XAU/USD traders, but the Core PCE Price Index is also very important to watch.

Despite optimistic US Treasury bond yields and a weak US Dollar, the gold price continues to rise, climbing to over $1,962 as it breaks a two-day slump early on Tuesday. By attempting to defend the risk-on attitude, gold traders appear to portray the month’s end positioning prior to the important US data.

In spite of higher US Treasury bond yields and a weak US dollar, the gold market posts its first daily rise in three days. The US 10-year and two-year bond coupons marked the first daily gains in four the previous day as market sentiment improved amid policymakers’ push for more reforms to tame the banking fears.

It’s important to note that the US 10-year and 2-year Treasury rates have been steadily rising as of press time, respectively, at 3.53% and 3.93%. It’s important to note that the US Dollar Index (DXY), which supports the corrective bounce of the XAU/USD, is still under pressure.

As the market attitude recovers, European and American officials establish deposit insurance programmes and extend emergency credit lines to ailing banks. Recent statements from central bank officials dismissing worries about the financial crisis and the Silicon Valley Bank (SVB) merger strengthened the risk-on attitude.

Comments from US Federal Reserve (Fed) officials and the Treasury Department have also subdued banking jitters while also testing gold traders. According to Jefferson of the Fed, “inflation ‘has started to come down,’ with part of that attributable to tighter monetary policy and some due to other causes, such improved global supply networks.”

Further, Federal Reserve Vice Chair for Supervision Michael Barr’s prepared testimony to Congress also favored the firmer sentiment as it read, “We are prepared to use all of our tools for any size institution as needed to keep the system safe”. On the same line were comments from the US Treasury stating that the US will keep using tools to prevent banking contagion as needed.

Geopolitical concerns and hawkish central bank rhetoric also affect the price of gold. Yet, it should be emphasised that the geopolitical worries about China and Russia also put downward pressure on the price of gold. The failure of China to maintain the rate of growth promised, as well as Russia’s apparent preparedness to deploy nuclear weapons against Ukraine, are discussed nonetheless. In the same vein, Kim Jong Un, the leader of North Korea, recently said, according to KCNA news, “(They) Should be completely ready to deploy nuclear weapons at any time.”

In order to predict intraday movements, gold traders will keep an eye on the US Conference Board’s (CB) Consumer Confidence for March as well as the secondary housing and activity statistics. The Monthly Inflation for Australia report due out on Wednesday and the Fed’s favoured inflation indicator, the Core Personal Consumption Expenditure (PCE) Price Index, due out on Friday, will receive the majority of attention, though.

Gold price fails to justify the previous day’s downside break of a one-week-old symmetrical triangle, while grinding higher past the 50-bar Exponential Moving Average (SMA). However, bearish signals from the Moving Average Convergence and Divergence (MACD) indicator, as well as an absence of the oversold Relative Strength Index (RSI) line, placed at 14, tease XAU/USD bears.

While the $1,840 level is the theoretical target of the aforementioned triangle breakdown, the 100-EMA and the 61.8% Fibonacci retracement level of the run-up in the price of gold from late February to early March, which are located respectively at $1,927 and $1,882, may act as catalysts for the XAU/USD bears.

Contrarily, for a corrective bounce to persuade Gold traders, it needs confirmation from the triangle’s lower line, which is close to $1,973. Following that, gold traders’ attention will turn to a downward-sloping resistance line from March 20 that is a portion of the triangle near the $2,000 psychological magnet.

A breach of the monthly high above $2,010, which also serves as an upward filter for the XAU/USD price, might send the precious metal towards the previous yearly high of close to $2,070.