Gold Price looks to retest $1,835 amid bear cross, firmer yields ahead of US inflation

• Gold Price fades the bounce off weekly low, 200-DMA.
• Fears of global recession, anxiety ahead of key data/events weigh on XAUUSD.
• Options market keeps bearish bias intact, ECB, US CPI in focus.

Gold Price (XAU/USD) fails to keep buyers on the board as the US dollar rebound joins the market’s cautious sentiment ahead of the key data/events to weigh on the metal prices. That said, the quote remains pressed around $1,848, reversing the bounce off a one-week low, heading into Wednesday’s European session.

US Dollar Index tracks Treasury yields to weigh on Gold Price

The US Dollar Index (DXY) reverses the pullback from a fortnight high, up 0.18% around 102.52 by the press time. The greenback’s weakness the previous day could be linked to a record slump in the US trade deficit and hopes of an upbeat US budget. The US trade deficit for April marked the historical fall of 19.1% to USD87.1bn the previous day. US 10-year Treasury bond yields rise four basis points (bps) to 3.01% after snapping a six-day downtrend the previous day. The rebound in the bond yields appears to reflect the market’s fears of faster/heavier rate hikes from the US Federal Reserve (Fed). Despite the recently upbeat data, firmer US inflation expectations and hawkish bets over September’s 0.50% rate hike seems to underpin the bond coupons.

Also read: Gold Price Forecast: Tepid recovery within a risk-averse environment

Recession fears exert additional downside pressure

Businessman calculating tax with coins at desk.

Be it the Atlanta Fed’s GDP measure or comment from World Bank (WB) President David Malpass, not to forget China’s Vice Commerce Minister Wang Shouwen and Vice Finance Minister Zou Jiayi, all of them renewed recession fears and weigh on XAUUSD prices. The Atlanta Fed’s GDP gauge now predicts only 0.9% growth, suggesting the economy is on the brink of a recession.

Elsewhere, risk-negative news from Ukraine also weighs on the Gold Price. “Kyiv says it has not yet reached any agreement with Russia or Turkey to allow the safe passage of its grain ships in the Black Sea, injecting skepticism into a push by the U.N. to create a vital food corridor,” said Politico.

Amid these plays, market sentiment remains sour and pushes the S&P 500 Futures to snap a two-day uptrend with near 0.30% intraday losses. The risk-aversion underpins the US dollar’s safe-haven demand and weighs on the gold prices.

In the end, options market data also signals at an increasing bearish bias among the traders. The recent risk reversal (RR) print, the spread between calls and puts, marks the biggest daily fall in a fortnight with a -0.105 figure. In doing so, the RR braces for the third consecutive weekly fall.

Gold Price technical outlook

Gold Price fades bounce off the 23.6% Fibonacci retracement (Fibo.) of the April-May downturn as the 50-DMA pierces off the 100-DMA from above, known as the bear cross. Also keeping the metal sellers hopeful is the steady RSI and MACD conditions.

That said, the quote’s latest weakness eyes to retest the 200-DMA level surrounding $1,840 before directing sellers towards the aforementioned Fibo. level near $1,835.

Should the XAUUSD bears keep reins past $1,835, the odds of witnessing a fall towards $1,807 and the $1,800 threshold can’t be ruled out.

On the contrary, recovery remains elusive until the quote stays below the 100-DMA level around $1,890.

Following that, the $1,900 threshold and late April’s high around $1,920 could test the gold buyers.

Overall, gold prices are likely to witness further downside but the road to the south is bumpy.

Great trading idea ahead on gold market