• Gold rose 0.23% on Friday, but is expected to fall above 3% for the week.
• U.S. hard-wearing goods orders are ahead of expectations, although downwardly revised March data softened the impact.
• XAU/USD is recovering after mixed US data weighing on the US dollar.
• Traders currently expect only 25 basis points of Fed rate cuts in 2024, reducing expectations for rate easing.

The gold price stabilized on Friday after recording consecutive days of losses, rising about 0.23%. However, it fell more than 3% on the week, the biggest weekly loss since December 2023. US hard-wearing goods orders data was better than expected, but a downward revision to the previous month’s reading reduced the impact of the report, giving the green featherlight to buyers gold.

The XAU/USD rate is at $2,332 after rebounding from the intraday low of $2,325.

Before the weekend, gold traders got into action. Thursday’s U.S. economic data showed U.S. business activity picked up, reducing the chances of the Federal Reserve (Fed) cutting interest rates. As of this writing, federal funds rate futures are estimating just 25 basis points of interest rate cuts in 2024.

Friday’s data did little to escalate investor optimism about the Fed’s policy easing. The U.S. Department of Commerce released a robust hard-wearing goods orders report for April, but March’s downward revision weighed on the dollar. This and a decline in U.S. Treasury yields helped gold recover after hitting a low.

Meanwhile, a recent University of Michigan (UoM) survey measuring consumer sentiment showed slight improvement, although inflation expectations were mixed.

US 10-year Treasuries yield 4.461% and lose one and a half basis points, weakening the dollar. The U.S. Dollar Index (DXY), which tracks the dollar’s performance against a basket of peers, is at 104.70, down 0.33%.

Daily market update: Gold price rises as dollar weakens

• Gold prices are supported by a decline in U.S. Treasury yields, a weakening U.S. dollar and improving risk appetite as Wall Street recovers.
• April U.S. hard-wearing goods orders rose 0.7% m/m, exceeding the estimated decline of -0.8% but less than the downwardly revised March figure of 0.8%.
• The University of Michigan’s consumer sentiment index for May was 69.1, down from April’s 77.2 but above the forecast of 67.5. One-year inflation expectations rose slightly to 3.3% from 3.2%, while five-year inflation expectations remained unchanged at 3%.
• S&P Global has published the final US PMI readings for May. The manufacturing PMI rose to 50.9, beating both estimates and April’s reading of 50.0. The PMI for services significantly exceeded forecasts and April’s 51.3, rising to 54.8.
• FOMC minutes showed that Fed officials were unsure about the degree of tightening of policy. They added that “it will take longer than previously expected to gain greater certainty about a sustained increase in inflation to 2%.”
• According to an article in The Wall Street Journal, gold prices were supported by purchases by emerging market central banks. The catalyst that triggered the purchases were Western sanctions imposed on Russia after its invasion of Ukraine.
• The World Gold Council revealed that since the third quarter of 2022, central banks have added around 2,200 tonnes of the gold metal.

Technical Analysis: Gold price remains on the rise above $2,330

Gold’s uptrend remains unchanged despite a pullback towards the $2,330 area. Even though the Relative Strength Index (RSI) has entered a bearish trend, it is at risk of breaching the 50 midline, suggesting that buyers are starting to flock to the stock.

Therefore, if XAU/USD rises above $2,350, it will expose the $2,400 mark. Further gains are on the cards as buyers target the year-to-date high of $2,450 and then $2,500.

Conversely, if the bears remain in power, they will need to push the XAU/USD rate below the May 8 low of $2,303. Once breached, it will be followed by the May 3 cycle low of $2,277.