Gold Prices Retreat Below $2,700 Amid Strong US Dollar
- Gold pares previous gains and retreats below $2,700 weighed by higher US yields.
- The divergence between the Federal Reserve and the rest of the major central banks is supporting the USD.
- XAU/USD is under growing negative pressure, aiming for $2,660.
Gold (XAU/USD) is currently experiencing a mild recovery from session lows at $2660, during Friday’s early American session. The US Dollar (USD) index is undergoing a significant reversal from two-week highs, offering some support to Gold. However, the rising US Treasury yields are likely to keep buyers in check.
Daily Digest Market Movers: Gold Pares Weekly Gains Amid a Strong US Dollar
- Gold is on track for a moderate advance this week, supported by the uncertainty in the Middle East. However, positive momentum faded as markets calmed and focus shifted to the US economy.
- US Jobless Claims increased by 242K against expectations, signaling potential Fed cuts next week.
- US Producer Prices showed mixed results, with headline PPI accelerating at a 0.4% pace and core PPI easing to 0.2%.
- The ECB and SNB’s rate decisions highlighted the divergence in central bank guidance, supporting the US Dollar.
- US consumer prices grew at their fastest pace in seven months, indicating a shift in inflationary trends.
Technical Analysis: XAU/USD Under Growing Bearish Pressure
Gold’s rally was capped at the $2,720 resistance area, with bears aiming for a retest of the $2,660-2,665 range. Support levels include $2,630 and $2,610.
Resistance levels are seen at $2,700 and $2,730.
XAU/USD 4-Hour Chart
Gold FAQs
- Role of Gold: Gold is a safe-haven asset, hedge against inflation, and widely used by central banks to support their currencies.
- Central Banks and Gold: Central banks hold significant Gold reserves to improve currency strength and solvency.
- Gold Correlations: Gold has an inverse correlation with the US Dollar, US Treasuries, and risk assets.
- Factors Affecting Gold Prices: Geopolitical instability, recession fears, interest rates, and USD behavior influence Gold prices.