Gold (XAUUSD) Price Rebounds While Bond Yields Remain Elevated on Eased Recession Fears

Gold (XAUUSD) prices dropped last week due to a surge in risk appetite following the 90-day tariff truce between the US and China. Spot gold dropped to $3,123 and closed at $3202, marking its worst weekly performance since November 2024.

This decline followed a recent high of $3,500, which was reached last month amid peak tariff tensions. The easing of trade tensions triggered profit-taking among futures traders and a wave of liquidation in the gold market.

Major institutions have also revised their recession forecasts, reflecting improving market sentiment. Goldman Sachs reduced its US recession probability from 45% to 35%, while Barclays dismissed recession risks entirely. J.P. Morgan now places the probability below 50%. This reduction in recession risk weakens demand for gold, which traditionally benefits from economic uncertainty. The shift in outlook indicates stronger investor confidence in equities and riskier assets.

On the other hand, the rising US Treasury yields and a stronger US dollar also reduced the appeal of gold. These macro shifts signal a short-term bearish environment for precious metals. However, the inflation data continues to soften, and the market still expects two Federal Reserve rate cuts, starting in September. This outlook supports gold in the longer term. Moreover, geopolitical uncertainty, including US-Iran tensions and the Russia-Ukraine crisis, is increasing market instability. Despite the short-term correction, the bullish trend could resume after the correction.

Gold (XAU) Technical Analysis

Gold Daily Chart – Support from 50-Day SMA

The daily chart for gold shows that the price found support at the 50-day SMA and rebounded higher. After hitting this support, the price formed a bullish hammer candle. The candle that followed developed into a consolidation pattern, indicating that gold is establishing support at this level.

Moreover, the RSI consolidates at the midline, which suggests that prices are in a consolidation phase rather than a strong downtrend. Despite the sideways movement, the price remains above both the 50-day and 200-day SMAs, which confirms that the overall trend remains positive.

A break above $3,370 will serve as confirmation that gold is ready to move higher.

Gold 4-Hour Chart – Rebound from Support

The 4-hour chart for gold shows that the price has found support at the black trendline. This support is significant as it marks the junction between the black trendline and the red-dotted trendline. The price rebounded from $3,123 and showed positive momentum.

For confirmation of a bullish move, the price must break above the $3,300 level. This breakout would validate the rebound and signal the potential for further gains.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Support of 50-Day SMA

The daily chart for the US 10-year Treasury note yield shows that yields are moving toward the 4.60–4.62% range. However, on Friday, the market pulled back toward 4.40% and consolidated at lower levels.

Despite this correction, yields remain above the 50-day and 200-day SMAs, which indicates that bullish momentum is still intact. Moreover, the RSI is above the midline, supporting the view of continued positive momentum in the market.

10-Year Treasury Note Yield 4-Hour Chart – Positive Development

The 4-hour chart for the 10-year US Treasury yield also shows bullish momentum. The yield found a bottom of around 4.10%, forming an inverted head and shoulders pattern.

This pattern suggests that Treasury yields may trade higher once the current consolidation phase ends.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index (DXY) shows strong bearish pressure. The index recently hit the 102 level near the 50-day SMA and then moved lower. However, it managed to close above 100.65, showing some resilience. The earlier rebound from the 98 level now appears to be fading, suggesting that the index may continue lower. On the other hand, the RSI consolidates at the midline, indicating some underlying strength despite the bearish structure.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that the index is trading within a descending channel. The rebound from 98 formed an inverted head and shoulders pattern, which led to strong upward momentum toward the channel resistance at 102.

After hitting 102, the index began to consolidate lower within the channel. However, as long as the index remains above 100.35, the possibility of an upward continuation remains likely. A break below 100.35 will indicate further downside towards 98.