Gold shines bright ahead of Fed Chair Powell speech

FXStreetJul 2, 2024 12:23 AM

Gold remains steady, unaffected by rising US Dollar and Treasury yields.
Mixed US manufacturing data: S&P PMI expands, ISM PMI contracts for third consecutive month.
US 10-year Treasury yield climbs nearly 9 bps to 4.489%, bolstering Greenback rebound.

Gold price advances late on Monday even though the Greenback registers minuscule gains propelled by elevated US Treasury bond yields, following a release of softer-than-expected US economic data. That, along with a shortened week in observance of Independence Day in the US and an eventful week, keeps the XAU/USD trading within familiar levels near $2,331, up 0.23%.

The US economy revealed business activity figures on the manufacturing front with mixed readings. The S&P Global Manufacturing PMI stood in expansionary territory, contrary to the ISM one, which contracted for the third straight month in June.

Market participants remained cautious, with US equity indices performing mixed in the mid-North American session. Meanwhile, the US 10-year Treasury yield rose almost nine basis points to 4.489%, lending a lifeline to the Greenback, down 0.33% earlier in the day before staging a comeback, gaining 0.09%.

Traders are eyeing the Federal Reserve (Fed) Chairman Jerome Powell's speech on Tuesday, followed by the Fed’s latest monetary policy minutes on Wednesday. After that, the US economic schedule will feature Services PMIs from S&P and the ISM, followed by Friday’s US Nonfarm Payrolls.

Daily digest market movers: Gold price prints minimal gains post-PMIs

June’s US S&P Global Manufacturing PMI was 51.6, slightly higher than the previous month but missing the forecast of 51.7.
ISM Manufacturing PMI for June was 48.5, lower than the estimates of 49.1 and down from May’s 48.7.
According to CME FedWatch Tool, odds for a 25-basis-point Fed rate cut in September are at 59.5%, up from 58.2% last Friday.
December 2024 fed funds rate futures contract implies that the Fed will ease policy by just 35 basis points (bps) by end of year.

Technical analysis: Gold price hovers around Head-and-Shoulders neckline

Gold price remains upwardly biased, though it is consolidating near the Head-and-Shoulders neckline from $2,320 to $2,350. Although the bearish chart pattern remains in play, momentum has shifted neutral, with the Relative Strength Index (RSI) braced to its 50-neutral line, hinting that neither buyers nor sellers are in control.

For a bearish continuation, sellers need to push prices below $2,300. Once done, the next support would be the May 3 low of $2,277, followed by the March 21 high of $2,222. Further losses lie underneath, with sellers eyeing the Head-and-Shoulders chart pattern objective from $2,170 to $2,160.

On the other hand, if buyers stepped in and conquered $2,350, that would expose additional key resistance levels like the June 7 cycle high of $2,387, ahead of challenging the $2,400 figure.

Economic Indicator

Fed's Chair Powell speech

Jerome H. Powell took office as a member of the Board of Governors of the Federal Reserve System on May 25, 2012, to fill an unexpired term. On November 2, 2017, President Donald Trump nominated Powell to serve as the next Chairman of the Federal Reserve. Powell assumed office as Chair on February 5, 2018.