Gold Price Held Back By Multi-Decade High US Treasury Bill Yields

Gold price analysis, price and chart

• US one-month bond yields are testing multi-decade highs.
• FOMC meeting minutes and primary PCE produce the following macro drivers for the precious metal.

Concerns that the ongoing debt discussions may be too late and to see the US heading for a technical default continue to lift short-term US Treasury yields to levels not seen in decades. The 1-month US Treasury note is now trading at a yield of around 5.65% as investors demand more for their money during the negotiation period. Talks between President Joe Biden and House Speaker Kevin McCarthy haven’t yielded much feedback so far though both sides said the ongoing talks were productive, while President Biden added that default was “off the table.” Treasury Secretary Janet Yellen’s recent comments that if a deal is not reached by early June, it is very likely that the debt default will continue to rock the market.

1-month US Treasury yield – daily rate chart

While gold is currently struggling with higher US bond yields, ahead of this week, starting later today, there are a few high-profile US economic releases and events that gold traders should keep in mind. Minutes of the latest FOMC meeting this evening should give more details on what was discussed at the last meeting, while Thursday sees the release of the second reading of US GDP for the second quarter. On Friday, the Fed’s preferred measure of inflation, the core PCE is released at 12:20 GMT ahead of Michigan’s final consumer confidence report for May.

For all market movement data releases and events, see DailyFX Economic Calendar

Gold remains near a multi-week low of $1952 an ounce. It may retest this level if US bond yields rise further. Selling off May 4 highs of $2081 an ounce. Relentlessly with little in the way of any sustained bounce seen. If gold is to go higher, resistance is from the 20- and 50-day moving averages, at $1,993/0z. and 2001 dollars/oz. You will need to bring it out convincingly.

Daily Gold Price Chart – May 15, 2023

Chart via TradingView

Retailers keep buying

Retail trader data shows that 65.63% of traders are net long with the ratio of long to short traders at 1.91 to 1, the number of net long traders is 1.65% less than yesterday and 0.33% less than last week, while the number of net long traders is Traders’ net short positions were 3.87% higher than yesterday and down 6.57% from last week.

We usually take a view contrarian to crowd sentiment, and the fact that traders are holding on suggests that gold prices could continue lower. Positioning is less net buying than yesterday but more net buying than last week. A mixture of current feelings and recent changes gives us More mixed bias in gold trading.

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