By Barani Krishnan

Investing.com — The bad news on the economy seems to be getting a little ‘badder’ each day.

The bad news for gold bears though is that the Fed doesn’t seem to be taking it too badly. The central bank is most likely sticking to a half-point rate hike in June instead of a three-quarter point increase that would have taken the yellow metal’s implosion to the next level.

That has allowed the , gold’s nemesis, to slip from the 20-year highs above 105 in early May to a little just above 101 — a drop of more than 3%. Bond yields, measured by the Treasury’s , have also been plunging, dropping almost 3.7% just on Tuesday alone and heading for a third straight week of losses. That’s good news for bullion’s bulls.

At Tuesday’s settlement, on New York’s Comex was at $1,865.40 per ounce, up $17.60, or almost 1%, on the day.

Earlier in the session, the benchmark gold futures scaled a peak of $1,868.80 — its highest in two weeks. What’s more, June gold has managed to stay in the green for a fourth session in a row, its longest since a five-day winning streak between April 7 and 13, that coincided with Tuesday’s two-week high.

Gold’s current trajectory could put it on track to regaining the $1,900 perch, even if just momentarily, said Sunil Kumar Dixit, chief technical strategist at skcharting.com.

According to Dixit who relies on gold for his decisions, the daily and weekly stochastics are in favor of an upward move towards the 50-Day Exponential moving average of $1.884 or the 100-Day simple moving average at $1.886, and also the weekly middle Bollinger Band, $1,890.

“The current uptrend can extend to $1,900 and $1,910 where the momentum can be exhausted,” added Dixit. “On the event of correction, the 200-Day SMA of $1,839 can act as strong support.”

Ed Moya was an analyst for OANDA online trading platform. He shared a similar opinion.

“Non-interest bearing gold is a safe-haven again and it could be on the verge of a major breakout if prices can recapture the $1885 level,” said Moya. “A peak in Treasury yields is in place and now the dollar looks like it is ready for a pullback as the ECB is ready to raise rates which is good news for the euro.”

He said gold should remain supported as inflationary pressures weigh, China’s Covid situation remains a big unknown, and corporate America continues to slash outlooks.

“There might be no stopping gold right now as the wall of worry on Wall Street continues to grow,” said Moya. “The US economy is not falling apart, but the weakness it is experiencing is much worse than many expected.”

A sign of this concern is the drop in monthly home sales in the United States in April. The Commerce Department released data Tuesday. It reinforced the belief that the housing market may be slowing due to mortgage and interest rates rising.

These new home sales figures follow data that last week showed existing house sales fell in the United States for the third straight month, as mortgage and interest rates increased. Prior to that, the National Association of Home Builders said home building sentiment — a gauge of domestic construction activity — hit two-year lows in its early survey for May.

Both housing and real property play important roles in the U.S. Economy. About 65% of US occupied housing units is owned-occupied, which makes homes an important source of household wealth. Home construction also provides employment opportunities. A crash in housing markets caused the financial crisis of 2008-09. This led to the Great Recession.