Gold Rose as a Drop in Dollar and Treasury Yields Rekindled Demand

  • Commodities Analysis

Gold yesterday settled up by 0.65% at 50544 as a drop in U.S. dollar and Treasury yields coupled with a slide in risk assets rekindled demand for the safe-haven bullion amid worries about global growth. The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, reaching a four-month-high, potentially hinting at some cooling in demand for labor amid tightening financial conditions. But the labor market remains tight, with the report from the Labor Department showing the number of people on jobless rolls at its lowest since the end of 1969 in early May. Gold's reputation as an inflation hedge is being countered by an aggressive policy stance taken by central banks to fight soaring prices.  
 
Federal Reserve Chair Jerome Powell recently stated that the central bank was intent on using its tools to bring down multi-decade high inflation. The Fed has raised its benchmark policy rate by an aggregate of 75 basis points this year and is on track to increase it again in 50-basis point increments at each of the next two meetings in June and July. Meanwhile, two US central bankers said they expect the Fed to downshift to a more measured pace of policy tightening after July as it seeks to quell inflation without lifting borrowing costs so high that they send the economy into recession.  
 
Technically market is under short covering as the market has witnessed a drop in open interest by -2.38% to settle at 5711 while prices up 326 rupees, now Gold is getting support at 50148 and below same could see a test of 49752 levels, and resistance is now likely to be seen at 50850, a move above could see prices testing 51156.

Trading Ideas:
# Gold trading range for the day is 49752-51156.
# Gold prices rose as a drop in U.S. dollar and Treasury yields coupled with a slide in risk assets rekindled demand for the safe-haven bullion
# U.S. weekly jobless claims rise; continuing claims lowest since 1969
# Federal Reserve Chair Jerome Powell recently stated that the central bank was intent on using its tools to bring down multi-decade high inflation

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100

Related Articles