Gold prices finish slightly higher ahead of impacting items

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Monetary front: Federal reserve's stance and market reaction

There’s been plenty to digest as of late and on multiple fronts. In fiscal policy, the debt ceiling legislation got through the House of Representatives with relative ease. Now, it's off to the Senate, where hopes are high that no amendments will halt its progress.

On the monetary front, there was more Federal Reserve (Fed) member speak on offer. It was mostly dovish. Harker was "increasingly" in favour of "skip, not pause".

Jefferson pointed in the same direction, speaking of more time to process the data. Meanwhile, Bowman was worried about the housing rebound and its implications on their battle against inflation. This concern remains even as lower rents eventually feed into future pricing figures.

In all, market pricing (Refinitiv) showed a shift for the June meeting. The majority now favours a lack of a rate hike with the move to 5.25-5% in either July or September ('skip' instead of 'hike').

Performance of Treasury yields and US economic data

As for Treasury yields, they mostly finished the session lower. However, they were little changed in real terms. Breakeven inflation rates dropped to lows unseen in years for the five-year. US economic data was somewhat mixed:

1) Job openings for April reversed their recent decline to rise back above 10m. However, there were weak points within the report. The plunge in quits translates into a less tight jobs market.

2) Chicago’s PMI for May plummeted further into contraction territory. It had a 40.4 print from 48.6 prior and was well beneath expectations.

3) The weekly mortgage applications out of MBA suffered another decline, this time by 3.7%.

Upcoming rleases: Manufacturing PMIs and Non-Farm Payrolls

We’ve got manufacturing PMIs (Purchasing Managers’ Index) today out of both ISM and S&P Global. Sub-50 contracting readings are expected from both. More central bank member speak with the Fed’s Harker is expected. After that, attention shifts to tomorrow’s (usually) market-impacting Non-Farm Payrolls.

Gold technical analysis, overview, strategies, and levels on the daily time frame

On the daily time frame, its previous 1st Resistance level managed to hold.

This favoured contrarian sell-after-reversal strategies while causing conformist buy-breakouts to fail. This happened after plentiful tests for conformists on the lack of intraday follow-through past key levels.

While technical considerations usually result in more volatility at these levels, the relative lack of it is shifting those same expectations.

It opens the possibility for a technical overview shift from the current “Volatile”.

IG client* and CoT** sentiment for gold

As for sentiment, price gains usually result in a drop in buy bias amongst retail traders. Instead, it has risen from a heavy long 67% yesterday to a heavier 69% as of this morning. Larger speculators according to last Friday’s CoT report remain close to extreme buy levels.

For the remaining precious metals, retail sentiment is far higher and in extreme buy bias for silver (rising to 85%), platinum (a notch higher at 86%), and palladium (highest at 94%).

Gold chart with retail and institutional sentiment

_{*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.}