- Gold price is slightly off the two-month highs but the upside remains intact.
- Hotter global inflation and Russia-Ukraine tensions underpin gold price.
- Firmer yields could trigger pullbacks, which could be a good buying opportunity.
Gold price jumped as much as $40 to clinch fresh two-month highs of $1,843 on Wednesday amid a sudden turnaround in the investors’ sentiments. The ongoing rally in the US Treasury yields on aggressive Fed’s tightening expectations failed to deter gold bulls, as they cheered 30-year high inflation rates in the UK and Germany. Investors rushed to the inflation-hedge gold, as worries over the economic impact of rising price pressures spooked markets. Additionally, risks of escalating Russia-Ukraine geopolitical tensions also underpinned gold’s safe-haven appeal and bolstered the rebound.
Gold price is retreating this Thursday after renewing two-month highs at $1,844, as the risk sentiment has recovered on monetary policy easing from China. The People’s Bank of China (PBOC) announced mortgage loan rate cuts to support the faltering economic growth. The firming up of the US rates also temper gold’s bullish momentum. However, US President Joe Biden's concerns on rising inflation, as well as, warnings over a potential Russian invasion of Ukraine and ruling out lifting tariffs on Chinese imports will continue to offer support to gold bulls. On the data front, the Eurozone final inflation reading, US weekly Jobless Claims and Existing Homes Sales data will be eyed for fresh trading opportunities in the sessions ahead.
Gold Price Chart - Technical outlook
Gold: Daily chart
Gold price finally broke to the upside from a two-month-old rising wedge formation on Wednesday, defying the bullish wedge’s natural tendency to yield a downside break.
The metal closed Wednesday above the rising trendline support at $1,839, where it now wavers.
If the corrective decline picks up pace, then gold price could drop further to test the previous critical resistance level around $1,831.
Failure to defend the latter could put the bullish 21-Daily Moving Average (DMA) support of $1,815 at risk.
Ahead of the 21-DMA cap, the $1,820 round figure could challenge the bullish commitments.
The 14-Relative Strength Index (RSI) has turned slightly lower, but still holds comfortably above the midline, suggesting that every dip in the price could be a good buying opportunity.
On the other side, bulls need to retest the two-month highs before it readies to take on the November 22 high of $1,849.
Daily closing above that level could initiate a fresh uptrend in gold price, with the $1,900 mark back in sight.
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.