Gold price tumbles on Wednesday as rising US yields boost Greenback

• Gold falls 0.87%, pressured by climbing US Treasury yields.
• Fed Governor Neel Kashkari's hawkish remarks underpin US yields, US Dollar.
• Upcoming PCE inflation data will play a critical role in shaping future price movements.

Gold prices slump on Wednesday amid rising US Treasury yields, boosting demand for the Greenback due to hawkish comments by a Federal Reserve (Fed) official. Consequently, sentiment shifted sour, the US Dollar climbed, and the XAU/USD is down some 0.87%, trading at $2,339 at the time of writing.

Wall Street trades in the red, while US yields from the belly to the long end of the curve rise between four and six basis points. Meanwhile, a scarce economic docket on Wednesday keeps traders digesting Minnesota Fed President Neel Kashkari's hawkish comments from Tuesday.

He said that Fed officials hadn’t disregarded rate hikes while adding that if they cut borrowing costs, it would be twice toward the end of 2024.

Data-wise, the US Conference Board (CB) revealed that May’s consumer confidence improved, yet Americans began to worry about a possible recession in the next 12 to 18 months, wrote Dana Paterson, The Conference Board’s Chief Economist.

Ahead in the week, traders are bracing for the expected release of April’s Personal Consumption Expenditures (PCE) Price Index - the Federal Reserve’s (Fed) preferred measure of inflation. The core figure is expected to be 2.8% YoY, while headline PCE is projected to increase by 0.3% MoM.

Daily digest market movers: Gold price falls as US Treasury yields advance to multi-week high

• Gold prices dropped sharply after hitting a three-day high as US Treasury yields rose.
• US 10-year Treasury note yields 4.616%, rising six basis points and underpinning the Greenback. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of peers, trades at 105.05, up 0.42%.
• Fed Governor Michelle Bowman said she would have supported either waiting to slow the quantitative tightening pace or a more tapered slowing in balance sheet run-off.
• The US Conference Board’s Consumer Confidence survey improved in May after three months of declines, rising to 102.0 from 97.0, exceeding estimates of 95.9.
• On Thursday, the US economic docket will feature the second estimate of the Gross Domestic Product (GDP) for Q1 2024, which is expected to be 1.3%.
• Additionally, traders will eye Initial Jobless Claims for the week ending May 25 and the Goods Trade Balance.
• Fed 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 drops below $2,350 as buyers lose momentum

Gold price is upwardly biased despite retreating to $2,320. As mentioned on Tuesday, “the rally is showing signs of exhaustion, with momentum beginning to fade,” as the Relative Strength Index (RSI) turned bearish, punching below the 50 midline.

That said, the XAU/USD's first support would be the 50-day Simple Moving Average (SMA) at $2,321. A breach 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 psychological mark of $2,350, further gains lie overhead. Up next would be the $2,400 mark, followed by the year-to-date high of $2,450 and then the $2,500 mark.