XAU/USD (gold price in terms of USD) extended the post-ECB extensive rally into a second day on Friday and rallied to the highest levels in thirteen months at 1283.01, before running into resistance once again above 1280. The prices corrected lower from thereon and gave up nearly $35 as the US dollar staged a solid recovery against its major peers and reversed more than a quarter of the ECB-induced massive sell-off. Gold prices also crashed as markets resorted to profit-taking as well as repositioning heading into the Fed decision. Technically, the prices breached the crucial 10-DMA support at 1253.87 and gave a daily closing below the last for the first time in 13 trading sessions.
As for today’s trade so far, the yellow metal attempts recovery from 1247.80 daily lows and now consolidates near session highs around 1257 levels, with the bulls gathering pace for further upside. However, every attempt to the upside gets sold into the resurgence of broad based US dollar strength as focus solely remains on the Fed decision due this Wednesday. Moreover, the European stocks joined the global risk-on rally and curbed the safe-haven demand for gold. Later today, in absence of no economic data on the cards, the prices will continue to remain in a wait and see mode, awaiting further impetus from the FOMC decision. Although a relief rally towards $ 1270, especially after Friday’s steep losses, cannot be ruled out.
Technicals –Negative price-RSI divergence on daily sticks
The daily chart for gold appears very interesting, with a clear bearish picture seen heading into the Fed decision this week. The daily sticks display the price-RSI negative divergence, indicating potential for bearish break from the recent upward trajectory. Thus case may hold true on the FOMC day, in case the Fed turns out hawkish/ less dovish than expected and surprises markets. In the meantime and ahead of Fed, we cannot rule out a relief rally in the prices as the daily RSI and turned higher and holds above the mid-lines, while the bullion manages to regain the 10-DMA barrier now a 1255.45 and consolidates at higher levels, for a next leg higher. Hence, the price finds the immediate resistance at 5-DMA (1258.82), beyond which doors open up for a test of 1265-1270 levels (previous tops). While, a failure to resist above 5-DMA today, the prices could once again test the 10-DMA support, below which selling pressure may intensify drowning the pair to 1250-1247 levels (psychological levels & daily low).
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 holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.