Gold Price Falls on Wednesday as Rising US Yields Boost USD

• Gold falls 0.87%, pressured by rising US Treasury yields.
• Fed Governor Neel Kashkari's hawkish comments underpin US yields and the US Dollar.
• The upcoming PCE inflation data will play a critical role in shaping future price movements.

Gold prices fall on Wednesday amid rising US Treasury yields, boosting demand for the Dollar due to hawkish comments from a Federal Reserve (Fed) official. Consequently, sentiment turned negative, the US Dollar rose and XAU/USD fell by around 0.87%, trading at $2.339 at the time of writing.

Wall Street is trading lower, while US yields from the middle to the long end of the curve rise by four to six basis points. Meanwhile, a thin economic agenda on Wednesday keeps traders digesting Minnesota Fed President Neel Kashkari's hawkish comments on Tuesday.

He said Fed officials had not ruled out rate hikes and added that if they cut borrowing costs, it would be twice by the end of 2024.

Looking at the data, the US Conference Board (CB) revealed that consumer confidence in May improved, although Americans began to worry about a possible recession in the next 12 to 18 months, wrote Dana Paterson, Chief Economist of The Conference Board.

Later in the week, traders prepare for the long-awaited release of the April Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve's (Fed) preferred measure of inflation. The underlying figure is expected to be 2.8% YoY, while headline PCE is projected to rise 0.3% MoM.

Daily Market Summary: Gold Price Falls as US Treasury Yields Advance to Multi-Week High

• Gold prices fell sharply after hitting a three-day high, as US Treasury yields rose.
• The US 10-year Treasury yield is 4.616%, up six basis points and supporting the Dollar. The DXY Dollar Index, which tracks the performance of the greenback against a basket of peers, is trading at 105.05, up 0.42%.
• Fed Governor Michelle Bowman said she would have supported waiting to slow the pace of quantitative tightening or a more gradual slowdown in balance sheet reduction.
• The US Conference Board's consumer confidence survey improved in May after three months of declines, rising to 102.0 from 97.0, beating estimates of 95.9.
• On Thursday, the US economic agenda will include the second estimate of the Gross Domestic Product (GDP) for the first quarter of 2024, which is expected to be 1.3%.
• Additionally, traders will be keeping an eye on initial jobless claims for the week ending May 25 and the goods trade balance.
• Federal funds rate futures estimate just 25 basis points of interest rate cuts in 2024, according to data provided by the Chicago Board of Trade (CBOT).

Technical Analysis: Gold Price Falls Below $2,350 as Buyers Lose Momentum

The price of Gold has a bullish bias despite falling back to $2,320. As mentioned on Tuesday, “the rally is showing signs of exhaustion, with momentum beginning to moderate,” as the RSI turned bearish, piercing below the 50 midline.

That said, the first support for XAU/USD would be the 50-day SMA at $2,321. A break of the latter will expose the May 8 low of $2,303, followed by the May 3 cycle low of $2,277.

On the other hand, if XAU/USD reclaims the key psychological level $2,350, more gains lie ahead. Next would be the $2,400 level, followed by the year-to-date high of $2,450 and then the $2,500 level.