Gold price came under some renewed selling pressure on Tuesday and dropped to its lowest level since March 17 during the early part of the European session. The XAU/USD is placed just below the $1,940 level, down around 0.25% for the day, with bears now awaiting a sustained break and acceptance below the 100-day Simple Moving Average (SMA) before placing fresh bets.
US Debt Ceiling Optimism Weighs On Gold Price
Lawmakers in the United States (US) signaled that they had reached a tentative agreement to raise the $31.4 trillion debt ceiling and avert an unprecedented default by the world’s largest economy. This, in turn, improves investors’ appetite for riskier assets, which is evident from a generally positive risk tone and exerts some pressure on the safe-haven Gold price. The recent US Dollar (USD) bullish run to over a two-month high further contributes to the offered tone surrounding the US Dollar-denominated commodity.
Stronger US Dollar Also Exert Pressure On XAU/USD
The markets started pricing in a greater chance of another 25 bps lift-off in June following more hawkish remarks by several Federal Reserve (Fed) officials. Additionally, data released last Friday showed that the Personal Consumption Expenditures (PCE) Price Index- the Fed’s preferred inflation gauge- unexpectedly rose in April and indicated that inflation remained sticky. This reaffirmed market expectations that the Fed would keep rates higher for longer, which underpins the buck and further weighs on the non-yielding Gold price.
Gold Price Seems Vulnerable To Sliding Further
That said, a modest pullback in the US Treasury bond yields holds back the USD bulls from placing aggressive bets and could support the XAU/USD, at least for now. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for Gold price is to the downside, and any attempted bounce might still be seen as a selling opportunity. Traders now look to the release of the Conference Board’s US Consumer Confidence Index for some impetus later during the early North American session.
Focus Remains On US Nonfarm-Payrolls (NFP) On Friday
The US bond yields might also influence the USD price dynamics and produce short-term trading opportunities. Market participants will further take cues from the broader risk sentiment. However, the focus will remain on the closely-watched US monthly employment details, popularly known as the Nonfarm-Payrolls (NFP) report, scheduled for release on Friday.
Gold Price Technical Outlook
From a technical perspective, some follow-through selling below the daily low, around the $1,932 area, will be a new trigger for bearish traders. The Gold price might accelerate the downfall towards the $1.919-$1.918 intermediate support before eventually dropping to the $1.900 round-figure mark.
Conversely, the $1,947-$1,949 region will likely act as an immediate hurdle ahead of the $1.957-$1,958 zone. Any further increase could attract fresh sellers and remain capped near the $1.980 region. The latter should act as a pivotal point, which, if cleared, could allow the Gold price to reclaim the $2.000 psychological mark.