Gold price rise amid market’s consolidation

Gold price remains sidelined as bulls fade upside momentum amid a pause in the United States Treasury bond yields and the US Dollar amid mixed catalysts surrounding and US data and fears of Federal Reserve’s (Fed) rate hikes. That said, the US Dollar Index (DXY) stays defensive near 102.60 after bouncing off seven-week low the previous day while the US 10-year and two-year Treasury bond yields seesaw around 3.41% and 3.82% respectively by the press time.

US Chicago Fed National Activity Index (CFNAI) dropped to -0.19 in February versus 0.0 expected and 0.23 prior. Further, Weekly Initial Jobless Claims declined to 191K for the week ended on March 18, versus 192K prior and 203K market forecasts. It should be noted that the US New Home Sales rose 1.1% in February from 1.8% prior, versus 1.6% analysts’ estimation, whereas Kansas Fed Manufacturing Index for March rose to 3.0 from -9.0 prior and 6.0 expected.Softer United States data needed for XAU/USD run-up

It should be noted that a collapse in the banking shares and chatters that the Fed’s emergency lending to the banks has ballooned the balance sheet, renewing fears of more Fed rate hikes, which in turn allowed the Gold price to pare recent gains. Also favoring the XAU/USD’s pause in further upside could be the mixed US data.

Reuters said, “Federal Reserve emergency lending to banks, which hit record levels the last week, remained high in the latest week, amid continued large-scale extensions of credit to the financial system, which now includes official foreign borrowing.” The news also mentioned that borrowing from the Fed caused the size of its overall balance sheet to move to $8.8 trillion from $8.7 trillion the prior week.

Furthermore, the US Treasury Secretary’s testimony in front of the House Appropriations Financial Services Subcommittee probed the market’s previous risk-on mood and allowed the Gold buyers to take a breather. US Treasury Secretary Yellen said, “China and Russia may want to develop an alternative to the US dollar,” while also showing preparedness for additional deposit actions `if warranted'. “Strong actions have been taken to ensure deposits are safe.”