In line with encouraging economic data, last week's published Fed Minutes of its February meeting also was more hawkish than expected. Together, these data helped the US dollar and treasury yields rise and pressure the gold prices. According to the published minutes, FOMC members believe that tackling inflation needs more time and effort, which means, for now, the central bank's tightening policy can continue even with more rate hikes before ending the cycle.
Last weeks' gold downtrend continued until the last day of February to touch almost 1,804 before increasing above $1,840 in the next 24 hours. However, Wednesday's ISM manufacturing index stopped the bulls. According to the Institute of Supply Management (ISM), manufacturing activities increased to 47.7 in February, up from 47.4 in January, but still, it is under the expansionary level and 48.0 of estimates.
On the other hand, along with US inflation growth, Eurozone data also show that resurgent inflation has become a concern there. US Treasury yields rose as rate hike expectations were raised, with the US 10-year bond yield climbing to 3.98%. German yields on 10-year Bunds rose to 2.713. Also, Italy's 10yr yields were last seen at 4.572%, and UK yields on 10-year Gilt rose to 3.84%.
Market expectations of the major central banks' interest rates continue to raise yields, pushing gold prices down since assets yielding interest become a more attractive investment compared to gold. However, we must mention that weaker stock markets can also slow down the bears, as yellow metal's safe-haven demand will support its price.
From the technical point of view, bears faced difficulty continuing their way in the daily chart, while bulls started fighting back above $1,800. We have the first support in H1 and H4 charts at $1,825. If gold prices increase, the next resistance can be around $1,875. Conversely, if gold prices decline, support may be near $1,773 after breaching the psychological level of $1,800.
