Gold is stabilizing near $1779 on the backdrop of weakness in US 10Y bond yields and which continued for the third straight day.
However gold weakness is likely to continue due to strength in the dollar index which rallied from the recent low of 89.515 registered on May 25. The dollar index is currently holding near 92.188, which is supported by hawkish fed comments last week.
Gold prices may trade in a limited range today as any major economic data is not scheduled to release but data released last week were supportive of gold prices. German May PPI rose +1.5% m/m and +7.2% y/y, against expectations of +0.7% m/m and +6.4% y/y. The +7.2% y/y gain was the largest year-on-year increase in 12-1/2 years.
Also, Japan May national CPI ex-fresh food & energy fell -0.2% y/y against expectations of -0.3% y/y. Rising inflation numbers are supportive of gold prices which is used as a hedge against inflation.
Hawkish comments from St. Louis Fed President Bullard also supported a negative move in gold prices on Friday. He said that the FOMC "has been surprised by stronger-than-expected growth over the last six months with more inflation than we were expecting, and it's natural that we've tilted a little bit more hawkish here."
However, BOJ Governor Kuroda’s comments were supportive of gold prices. He said Japan needs continued stimulus even after the pandemic ends and that the BOJ isn't thinking about stopping ETF purchases and isn't considering selling ETF holdings.
Gold prices are likely to face stiff resistance near $1803-$1845 while immediate support level could be seen around near 100 days EMA at $1736