- Gold fell for a fifth straight day to a multi-week low.
- Tough Fed expectations, U.S. bond yields soared, and continued buying pressure on the dollar.
- Recession fears, safe-haven impulses failed to impress the bulls or provide any support for the metal.
Gold extends this week’s bearish trend for the fifth day in a row, It fell to a three-week low on Friday. XAU/USD remained subdued during the North American morning session, currently trading around $1,750, down nearly 0.40% on the day.
Fears of a global economic downturn sparked a fresh wave of global safe-haven trades on the last day of the week. This was evident in the generally weaker tone in equities, which proved to be a key factor in providing some support for the safe-haven precious metal. That being said, the continuation of the recent dollar rally has limited dollar-denominated gold’s intraday recovery attempts.
In fact, the U.S. dollar index (DXY), which tracks the greenback’s performance against a basket of currencies, surged to a one-month high on Fed hawkish expectations. Minutes of the Federal Open Market Committee meeting released on Wednesday showed policymakers remained committed to raising interest rates to curb inflation. In addition, recent comments from several Fed officials suggest the Fed will stick to its policy tightening path.
In addition, the upcoming better-than-expected US macroeconomic data once again confirmed the market, which in turn led to a further rise in US Treasury yields . In fact, the yield on the benchmark 10-year U.S. government bond rose back to near the 3.0% threshold. This, in turn, continued to support the dollar and further drove outflows from the unyielding yellow metal in favor of bearish traders.
Even from a technical standpoint, the recent repeated failures near the $1,800 mark and subsequent break below the previous month’s low of $1,754 The nearby area also adds credibility to the negative outlook. This, in turn, suggests that the path of least resistance for gold is to the downside. Still, the metal is on track to post deep weekly losses and break a four-week winning streak to hit a more than one-month high.
Technical level to watch
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