Gold Struggles As Market Sentiment Improves
2022.06.06 18:36
Gold prices fell slightly on Monday, recording the second consecutive decline as the improvement in investors’ sentiment diminishes the demand for safe-haven assets. The spot, XAU/USD, struggles to hold on to the $1,850 area after scoring a high of $1,857 during the European session.
On Monday, Beijing announced the relaxation of Covid-related restrictions following similar announcements for China’s financial hub, Shanghai, last week, which has helped to ease concerns related to the slowdown in the Asian giant’s economy and hence contributed to improving the market’s mood.
Meanwhile, the increase in U.S. bond yields – which could be considered the opportunity cost of holding gold – is a significant headwind for the yellow metal. The yield on the United States 10-Year note extended its advance and printed its six consecutive daily gain, standing at around 3.01%.
From a technical perspective, XAU/USD maintains the short-term bearish tone according to the daily chart, as indicators suggest a continued decrease in buying interest. The RSI maintains a negative slope below its midline, while the MACD shows that the bullish momentum is slowly fading.
XAU/USD daily chart.
If XAU/USD breaks decisively below $1,850, the immediate support is seen around $1,840, which is reinforced by the convergence of the 20- and 200-day moving averages. Below this area, the next supports could be found at $1,828, Jun. 1 low, and the $1,800 psychological level.
On the other hand, initial resistance could be faced at $1,860, followed by the June 3 high at $1874 and the $1,900 psychological level.
