Gold Price Forecast: Hovering Near One-Year High Despite Rising Bond Yields

Highlights

• Gold prices close to one-year high
• Bond yields increase, causing slight gold retreat
• Federal Reserve and ECB rate hike strategies differ

Overview

Gold prices are hovering just below their one-year high on Friday, as the latest U.S. economic data strengthened the belief that the Federal Reserve was nearing the completion of its interest rate hiking campaign. This news has put non-yielding gold in a position to close higher for a second consecutive week.

At 10:45 GMT, June Comex gold futures are trading $2052.90, down $2.40 or -0.12%. XAU/USD is at $2038.66, down $1.185 or -0.06%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $189.66, up $2.47 or +1.32%.

Gold Retreats as Bond Yields Rise, ECB Hints at Rate Hike Possibility

As bond yields continue to rise, the opportunity cost of holding gold has increased, causing its price to retreat slightly overnight.

Euro zone yields have reached a one-month high as attention turns to the European Central Bank’s (ECB) tightening strategy. Officials have even hinted at the possibility of a 50 bps rate hike in May.

On the other hand, the Federal Reserve contemplated pausing its rate-hike cycle in March due to the unexpected collapse of two U.S. regional lenders. However, inflationary concerns were deemed more significant, and the collapse ultimately led to a surge in gold prices, surpassing $2,000.

Gold Limits Losses as Dollar Hits One-Year Low; Eyes on US Retail Sales Data

Despite some downward pressure, gold managed to limit its losses overnight as the dollar fell to a one-year low, following news that the consumer price index (CPI) rose less than anticipated, increasing expectations for a pause in the Federal Reserve’s monetary tightening.

Later in the day, investors are anticipating the release of U.S. retail sales data, which, if weaker than expected, could propel gold towards its all-time high.

Daily June Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. A trade through $2063.40 will indicate the presence of buyers. A move through $1996.50 will change the main trend to down.

The minor range is $1965.90 – $2063.40. Its 50% level at $2014.70 is the nearest support. The short-term range is $1830.20 to $2063.40. If the trend changes to down then its retracement zone at $1946.80 – $1919.30 will become the primary downside target.

Daily June Comex Gold Technical Forecast

Trader reaction to $2045.80 is likely to determine the direction of the June Comex Gold futures contract on Friday.

Bullish Scenario

A sustained move over $2045.80 will indicate the presence of buyers. Taking out $2063.40 will indicate the buying is getting stronger. This could trigger a near-term acceleration to the upside with $2097.20 the next major target.

Bearish Scenario

A sustained move under $2045.80 will signal the presence of sellers. This could trigger a sharp break into the minor pivot at $2014.70. If this fails then look for the selling to possibly extend into the main bottom at $1996.50. Taking out this level will change the main trend to down with $1946.80 – $1919.30 the next key target.