Gold Price Experiences a Significant Pullback
The price of gold dropped to around $2,040.00 during the Asian session after reaching an all-time high of $2,079.76. The precious metal Experiences a Significant Pullback and swiftly corrected due to profit-taking following strong gains driven by the Federal Reserve’s (Fed) altered stance on interest rate guidance.
USD Index Attempts to Hold onto Support Amid Challenges
The USD Index is attempting to hold onto its immediate support of 101.07, but the downside appears more likely due to various challenges. Concerns regarding US banks have resurfaced, and apprehensions over debt ceiling issues are intensifying as US President Joe Biden is unwilling to raise the debt ceiling during negotiations with Republicans at the expense of his spending initiatives.
S&P500 Futures Show Recovery
S&P500 futures have shown some recovery, signaling an improvement in the risk-off market mood. However, escalating fears surrounding the US debt ceiling have significantly impacted Treasury yields, with the 10-year US government bond yields dropping to nearly 3.33%.
US Labor Market Data to be Closely Monitored
In the future, US labor market data will be closely monitored. The US Nonfarm Payrolls (NFP) data is expected to be lower than the previous release, with the Unemployment Rate remaining steady. Persistent labor cost index data could prompt the Fed to reconsider pausing its rate-hiking cycle as it could exacerbate inflationary pressure.
Gold Technical Analysis Suggests Resistance at $2,060
Gold bulls are currently being supported by the 50-period Exponential Moving Average (EMA) at $2,038.56 after filling the gap created after the Fed policy on an intraday chart. The goal for now is likely that Gold will face immediate resistance around the $2,060 level, with the potential to target an immediate support level of $2,035. Below this, the next support remains around the $2,020 level. Forex traders may consider selling below the $2,050 level.
US Concerns Impact Forex Trading
The news surrounding the US debt ceiling and labor market data could impact forex trading. The drop in Treasury yields and challenges to the USD Index may lead to a stronger position for other currencies in the forex market. Additionally, the technical analysis of gold suggests potential trading opportunities for forex traders interested in the precious metal.