Gold prices are pulling back on Tuesday, after being unable to hold above $2,000 as the dollar recovers some momentum. The DXY is returning to 101.50 even as US Treasury yields slide further. The spot price XAU/USD is trading at $1,982, almost $20 below the daily high.
The United States 10-Year note yield fell to 3.44%, the lowest level since April 14, while the 2-year yield retreated to 4.06%, also a two-week low. At the same time, equity prices on Wall Street continue to move sideways. Stock futures are falling, erasing Monday’s gains.
Market participants await key events ahead. Next week is the FOMC meeting and the US central bank will likely raise rates by 25 basis points. It could be the last hike of the tightening cycle. Prior to the meeting, this week, the US will release critical data including on Thursday the first estimate of Q1 GDP growth with consumer inflation.
As markets waver, gold might find it difficult to hold above $2,000 while, at the same time, bearish correction seems limited. On the contrary, a deterioration in market sentiment and rising US yields could send gold sharply lower.
From a technical perspective, the XAU/USD is moving with a bearish bias in the very short term, according to technical indicators. Price is staying below the 20-day SMA at $1,996. So far, declines are finding buyers around $1,970. A break lower could trigger more losses, with the next support at $1,960.
On the upside, the immediate resistance now stands at $1,990. Above $2,010, the yellow metal should recover momentum and strength, changing the bias to bullish.