Gold extends decline toward $1290, loses more than $15 on the day

  • Precious metal erases this week’s gains with today’s sharp drop.
  • 10-year US T-bond yield rebounds on Thursday.
  • US Dollar Index advances above 97 on positive data.

After closing the first three days of the week in the positive territory and touching its highest level since late March at $1310 on Wednesday, the XAU/USD pair fell sharply on Thursday and the bearish pressure gathered strength below the $1300 handle to drag the pair toward $1290. As of writing, the pair was down $15.50, or 1.2%, on the day at $1292.40.

The broad-based USD strength today seems to be driving the pair’s price action. Although the FOMC reaffirmed its cautious outlook and willingness to wait before making another policy change, the greenback didn’t have a difficult time staying resilient against its major rivals with the US Dollar Indexrising above the 97 mark.

Additionally, today’s data from the U.S., which revealed that the Producer Price Index rose to 2.2% on a yearly basis in March and initial jobless claims dropped to its lowest level in nearly five decades at 196K, provided an additional boost to the buck as well. Furthermore,  Federal Reserve’s Vice Chair Richard Clarida said that the U.S. economy was doing well despite the recent slowdown.

Meanwhile, the 10-year U.S. Treasury bond yield turned north today to weigh on traditional safe-havens such as the precious metal and forced the pair to push lower. 

Technical levels to consider

The pair could face the next support at $1288 (Mar. 28 low) ahead of $1280 (Apr. 4 low/Mar. 7 low) and $1276 (Jan. 21 low). On the upside, resistances could be seen at $1300 (psychological level/20-DMA), $1306 (50-DMA) and $1310 (Apr. 10 high).

Leave a Reply

Your email address will not be published. Required fields are marked *