As expected, XAU/USD (gold price in terms of USD) did run up to retest 1200 levels on late-Wednesday after Fed Chair Yellen wrapped her testimony before the Congress. The prices rose as high as 1198.64, bouncing-off knee-jerk downward spike t0 1181.42 daily lows, where the 5-DMA intersected. As Yellen’s testimony got underway, the greenback jumped higher on her optimistic remarks on the US economy, while she kept her gradual rate hike stance intact. The bullion dropped sharply to 1181.42 lows initially but, quickly recovered lost ground and climbed back toward $ 1200 mark as markets did not buy Yellen’s no so dovish comments amid persisting global headwinds (particularly China), sluggish US fundamentals and the USD appreciation. Thus, the USD resumed its downside momentum and aided the recovery in the precious metals towards NY close.
As for today’s trade, the yellow metal rallied to 1214.80, the highest levels since May 2015, after the prices tripped stops above the crucial $ 1200 marker. A sudden bout of buying interest developed around gold in early Asia, after investors scrambled for safe-haven amid falling equities and oil prices. Moreover, the greenback came under renewed selling pressure and dropped to fresh four-month lows of 95.54 against its major peers, which also helped the upsurge in the bullion. Subsequently, the prices failed to sustain at higher levels as USD recovered some ground and retreated to $ 1205, before jumping-off the last to now consolidate the upside below 1210 levels over the last few hours. Later today, we have the round 2 of Yellen’s testimony before the Senate, and new surprises are expected for her this time. Meanwhile, on the data front, the US employment claims will be reported, which is likely to have no major impact on the ongoing bullish run in gold.
Technicals –Aiming for Fib 127.20% level just ahead of $ 1230
On daily charts, the prices are extending higher for the second straight session, well above all moving averages. The bulls have built a solid support around 1200 levels (last three sessions’ high). The daily RSI has entered into the overbought territory and now stands at 82.25, which indicates a minor-correction is due before the next leg higher towards $ 1230 (Fib 127.20% retracement of Oct 15-Dec 3 fall). Hence, below a break of 1200 levels, the bullion could drop further towards upward sloping 5-DMA located at 1191.88. Overall the downside is likely to be limited as the uncertainty over Fed rate hike prospects for this year continues to linger in investors’ mind and hence, they run for cover in the safe-haven gold.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.