XAU/USD (gold price in terms of USD) witnessed a volatile session on Easter Monday, with limited volatility and low volumes exaggerating the moves in the precious metal. The prices dropped sharply to 1207.69 troughs ahead of the US session, although staged a robust $ 16 recovery from thereon and spiked to daily high at $ 1223.12 following tepid US economic releases. The US personal spending showed slower growth in Feb, while the pending home sales jumped to 7-month high last month. The prices recovered entire losses and swung back higher only to find stiff resistance near 1223-1224 region, and eased slightly to 1222.64 at close. However, the bullion managed to book the first daily gain in three consecutive sessions.
As for today’s trade so far, the yellow metal snapped its overnight recovery and fell back in the negative territory as the US dollar witnessed a minor pullback against its major peers ahead of Fed Chair Yellen’s speech due later in the NY session this Tuesday. The prices dipped, although remains above one-month lows and continues to consolidate in a tight range near $ 1220, as markets refrain from placing big heading into the main risk event for today – Yellen’s speech. Besides, the US consumer confidence the US consumer confidence data may provide fresh cues on the US economic recovery and eventually on the Fed interest rates outlook. Markets are expecting hawkish comments from Yellen, following a recent series of hawkish comments from other Fed officials. However, in case of dovish comments from the Fed Chair in wake of the slower pace of growth in the prices pressures, the USD could take another round of beating and therefore, boost the dollar-priced in gold.
Technicals –$ 1200 or $ 1240 on Yellen?
The daily chart for gold still appears bearish, with the daily RSI below the mid-line and still aiming lower, which suggests further scope for downside. Moreover, the prices fail to resist above extremely bearish 5-DMA placed at 1219.15, with offers pushing the bullion towards previous low reached at 1207.69. A break below the last, the crucial 1204/00 (upward sloping 50-DMA/ psychological levels) would be tested, opening floors for further downside towards $ 1190 levels. In case Yellen raises concerns over the softer inflation numbers and emphasis Fed’s gradual rate hikes stance, then the prices could swing back towards 10-DMA located near 1240 levels.
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