With the price of gold declining 6.66% during the three months that passed, the second quarter ended softly. From the beginning of 2021’s first quarter, was the poorest performance. Additionally, XAU/USD is still at the same value it was at this time two years ago.
Strangely, despite a number of beneficial aspects, gold deteriorated. Specifically, on June 30, the US dollar and Treasury rates both declined. This was in reaction to PCE core figures that were lighter than anticipated. PCE, the favored inflation indicator of the Federal Reserve, indicated an easing of pressures from underlying rising prices.
Despite this, the market sentiment struggled to benefit from a Fed that was not as aggressive, probably as a result of growing worries over a recession in the United States. In a bind, the Fed is. The central bank must make a more assertive shift to make up for its lack of urgency in light of the growing inflation from 2021. Additionally, the global financial monetary policies becoming more restricted is not inherently favorable for metals such as gold.
Until the markets end this week, gold volatility may continue to be limited. Figures from the United States ISM manufacturing PMI are expected within the upcoming 24-hour period. A 54.5 result is expected for June, decreasing from a 56.1 result in May. Unless there is a significant shock on any side, XAU/USD may continue to follow the current market trend.
Gold’s recent drop has pushed XAU/USD further into the 1787–1810 support range. Crossing this level might portend more suffering for the yellow metal. A declining trendline from March has been pushing the pair downward. This line may restore the main downward focus in the case of a turn increasing.
Approximately 86 % of individual traders are net-long gold, according to the IGCS measure. This is an indication that values may drop significantly because IGCS frequently acts as a contrarian signal. In comparison to June 30th when negative exposure fell by 5.67%, data from the week before show a 16.91% decline.