Gold price is hovering around seven-week lows as bears attack nearby support amid the oversold RSI. The US dollar gains upward momentum as fears of an economic slowdown intensify. This situation affects gold negatively and yields decrease. After the consumer index data announced the other day, a new data will be announced today that will affect gold and BTC prices. U.S. PMI, updates surrounding inflation, recession will be significant. Here are the details…
Latest situation in gold prices
Gold price (XAU/USD) remains on slippery slopes in Europe as it fell to around $1,797 early Friday morning, the lowest since early May. Meanwhile, the yellow metal is falling for the fifth consecutive day amid rising inflation and fears of an economic slowdown. The risk-averse mood is taking cues from prices and recent supply crunch, mainly due to the Russia-Ukraine crisis and China’s recurring COVID resurgence.
Negative sentiment drives markets to buy US dollars and bonds, which in turn suffocates the gold price. However, the US Dollar Index (DXY) is bullish as market sentiment worsens on growth fears. DXY bounces back from 12-day high. It caught a two-day uptrend near 104.80, around 104.75 on Thursday.
As we have also reported as Kriptokoin.com, negative personal spending data of the USA came in on Thursday. In addition, the soft pressures of the Fed’s preferred inflation indicator raised concerns about the health of the world’s largest economy. It suffocated the US dollar. The dollar’s previous decline is thought to be linked to the benchmark 10-year coupon coupons falling below 3.0% before rebounding to 3.01% at close.
What data should be considered?
S&P 500 Futures depict the current mood. It is down 0.80 percent, marking a five-day downtrend. US 10-year Treasuries reversed the early recovery of the Asian session. It rebounded to 2.967 percent, freshening to a three-week low. Risk catalysts are seen as the key for gold traders to watch. It also takes into account the expected June US ISM Manufacturing PMI of 55.0 versus the previous 56.1. In addition, according to experts, the first data of the Harmonized Consumer Price Index (HICP), the key inflation indicator for the Eurozone for June, will also be important.
Analysis for Bitcoin and gold: What will happen?
According to analyst Anil Panchal, gold price continues to lag behind after breaking the horizontal one-month support around $1,807. Strengthening the downtrend is the downside break above the $1,800 threshold. However, it seems close to $1,786 before the bears target a one-month descending support line near $1,775. Meanwhile, a corrective retracement requires confirmation from a reversal resistance to $1,807 support to target the three-week descending trendline.
So, what is the connection between gold and the PMI index? A high PMI is thought to mean the US economy is expanding. This is expected to cause a negative movement for gold prices. A lower PMI supports the yellow metal as it signals economic contraction. We can say that Bitcoin, which has an inverse correlation with gold at the moment, may decrease if the PMI is low, and rise if it is high. But time will tell exactly how prices will move.
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