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Gold Price Treads Water as US Dollar Steadies and GBP Rolls Over Ahead of BoENewsDaily technical analysisGold Price Treads Water as US Dollar Steadies and GBP Rolls Over Ahead of BoE

Gold Price Treads Water as US Dollar Steadies and GBP Rolls Over Ahead of BoE

On Tuesday, the value of gold is experiencing difficulties as the US Dollar appears to be gaining some level of preference, despite the fact that the US was observing a public holiday on Monday.

Although the primary stock market indices for Wall Street were not operational, the Treasury cash market remained open and witnessed an increase in yields throughout the curve.

The significant returns were observed to support the strong performance of high-value currencies. In addition, other developed market government bond yields also experienced an increase.

Although the 2-year Gilts of the UK government bonds have reached 5% for the first time since 2008, GBP/USD has decreased. The Gilts curve’s 5- and 10-year segments are also observing the peaks experienced in October of last year.

The moves come ahead of CPI data tomorrow and then the Bank of England on Thursday. The interest rate market is anticipating a lift in the official bank rate.

Japanese Government Bonds (JGB) have shown an anomaly in the government bond market, with their yields remaining unchanged despite the USD/JPY pair approaching a 7-month high.

If the depreciation of their currency persists, officials from the Bank of Japan may engage in jawboning.

The conclusion of US Secretary of State Antony Blinken’s visit to China was perceived as positive by many; however, there were no tangible advancements made during the trip.

The PBOC has implemented a 10 basis point reduction in the 1- and 5-year loan prime rates to 3.55% and 4.20% correspondingly.

The adjustment in the 1-year rate was consistent with the anticipated market trend. However, there were expectations for a reduction of 15 basis points in the 5-year rate, which is the benchmark used for pricing Chinese mortgages.

Today, the pricing of crude oil has been alleviated, with the WTI futures contract approaching approximately US$ 71 and the Brent contract declining below US$ 76.

The Australian Dollar has experienced significant declines on Tuesday following the release of the Reserve Bank of Australia (RBA) board meeting minutes. These minutes indicate that the board members are less certain about increasing interest rates by 25 basis points than what was previously assumed by financial markets two weeks ago.

The RBA’s official statement on monetary matters, released promptly after its decision on interest rates, appeared to have a somewhat more stringent tone than the minutes published today. The ASX 200 of Australia registered some positive developments in response to this news.

Looking ahead, the US return from holidays and will see some housing data.

On Wednesday, Jerome Powell, the Chair of the Federal Reserve, is scheduled to present the Semi-annual Monetary Policy Report to Congress.

GC1 (Gold front futures Contract) TECHNICAL ANALYSIS

The current decline in the value of gold, which has caused it to fall below an upward trend line, is not a definitive breach. The levels of support located in the 1936-1945 range have successfully prevented any further decline thus far and may persist in doing so.

On Thursday, there was a low of 1936 which has established the possibility of a Double Bottom formation that aligns with a prior low. The confirmation of this potential Double Bottom would require its ascent above the neckline situated at 2000.

The price movement experienced a decline below the 100-day Simple Moving Average (SMA); however, the daily closing price managed to recover and surpass it.

It is plausible that the present market has dismissed the bearish sentiment that was evident in recent times.

If the area is breached, a bearish trend may emerge. The subsequent significant support area could be found at the next Double Bottom of 1811 and 1813.

If gold gets above the 55-day SMA, currently sitting just under 2000, it will be above all period daily SMAs, which may suggest that bullish momentum is evolving.

In the academic context, it is conceivable that in the event that the value surpasses 2000 units, it may advance towards a potential area of resistance prior to reaching its highest recorded value.

In May, the stock market reached a maximum value of 2085 points, surpassing the previous peak of 2079 points in March 2022. However, it was unable to exceed the all-time high of 2089 points, resulting in a Triple Top formation. This formation is an extension of the previously observed Double Top pattern.

The establishment of a potential area of resistance within the range of 2080-2090 may be observed. However, if there is a sudden increase beyond these levels, it could suggest a continuation of bullish market trends.

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