Gold price dives amid rising US yields

• Gold price starts week on back foot as high US yields dent appetite for the non-yielding metal.
• Fed officials signal only one rate cut in 2024 via Minneapolis Fed's Neel Kashkari.
• Upcoming US economic data releases, including Retail Sales and Industrial Production, to influence Gold price.
• Precious metals traders await US Retail Sales and Industrial Production on June 18.

Gold prices retreated on Monday due to rising US Treasury bond yields after Federal Reserve (Fed) officials decided to keep rates unchanged and revised their expectations on rate cuts from three to one later in the year. Therefore, the XAU/USD trades at $2,317, down 0.63%, after retreating from the daily high of $2,332.

The golden metal is on the defensive as US Treasury bond yields advance after Fed officials remained hawkish. Despite that, the Greenback failed to gain traction and remains one of the laggards in the FX space.

Over the weekend, the Minneapolis Fed’s Neel Kashkari discussed monetary policy, saying that “it’s a reasonable prediction” that the Fed will ease policy by just 25 basis points (bps) in 2024. This would keep US bond yields high, making it less appealing to hold bullion as the fed funds rate remains lofty.

Earlier, Philadelphia Fed President Patrick Harker said that if the economy evolves as expected, one rate cut in 2024 is expected. He said the policy is restrictive and positioned to bring inflation to 2%.

Gold traders will watch the release of Retail Sales, Industrial Production, Initial Jobless Claims, and the S&P Global Purchasing Managers Index (PMI) figures.

Data from the Chicago Board of Trade (CBOT) shows traders expect 35 bps of easing during the year via December’s 2024 fed funds rate contract.

News that the People’s Bank of China has paused its 18-month bullion buying spree has weighed on the precious metal. PBOC holdings held steady at 72.80 million troy ounces of Gold in May.

Daily digest market movers: Gold price flops on higher US yields

• Rising US Treasury yields remained high, capping Gold’s advance. The US 10-year T-yield is up almost six bps to 4.281%.
• US Dollar Index (DXY) decreased by 0.18% to 105.34, putting a lid on Gold price.
• Despite US CPI report showing disinflation process continuing, Fed Chair Jerome Powell commented that they remain “less confident” about the progress on inflation.

Technical analysis: Gold price sellers regain control as prices are headed toward $2,300

Gold price is neutral to downwardly biased as the Head-and-Shoulders chart pattern remains intact, hinting that the golden metal could dip below the $2,200 mark. Momentum shows that sellers are gathering steam with the Relative Strength Index (RSI) diving further into bearish territory, opening the door for further losses.

If XAU/USD drops below $2,300, the first support would be the May 3 low of $2,277, followed by the March 21 high of $2,222. Further losses lie beneath, as sellers would eye the Head-and-Shoulders chart pattern objective from $2,170 to $2,160.

Otherwise, if Gold extends its gains past the June 7 cycle high of $2,387, it will be ready to test the $2,400 figure.