Spot gold price (XAU/USD) was unable to hold on to the $1800 psychological resistance on Friday after bond yields rebounded and added strength to the greenback. The yellow metal lost traction and found itself on offer after the 10-year Treasury Note added 1.16% on Friday.
Gold price hit a daily high of $1,795.66 in the London session, but lost all these gains and headed into negative territory by as much as 0.33% (as of the time of writing) to find its way towards the $1,777 price mark.
The long-term US Treasury bond yields picked up pace after the Flash Manufacturing PMI came in at 60.6, which was marginally lower than the consensus of 60.9 and slightly higher than last month’s 59.1. The key component of the report showed that producers were passing on price increases of inputs to consumers at a faster rate, sparking fears of inflation and increasing demand for US Treasuries.
Demand for bonds typically causes capital to flow away from non-yielding assets such as gold, hence the selloff witnessed on the day.
Technical Outlook for XAU/USD
The decline in gold price on the daily chart from the 1789.49 resistance shows that the XAU/USD has completed the measured move from the bullish flag. The correction is now in progress, targeting 1763.30 in the first instance. A further decline brings 1741.01 into the picture, with 1719.13 also lining up as a potential corrective target.
On the other hand, bulls need to see a break of 1789.49 and attainment of the 1800.00 psychological resistance to show the higher high that signals uptrend continuation. This move possesses opportunities to target the 1815.20 and 1840.00 resistance targets.