• Gold price is extending previous gains amid weak US Dollar, US Treasury bond yields.   
  • Markets stay cautious amid China covid risks, ahead of US Federal Reserve minutes.
  • The United States data will also offer fresh cues on the Federal Reserve policy outlook.
  • Gold price yearns for a bull flag breakout amid an impending bullish crossover.

Gold price is treading water in early Wednesday’s trading, looking to extend the previous upbeat momentum. Favorable daily technical setup and a broadly weaker US Dollar (USD) alongside the US Treasury bond yields keep Gold price underpinned, Traders brace for a fresh batch of critical economic data from the United States (US) and the Federal Reserve (Fed) November meeting minutes.

United States data, Federal Reserve minutes hold the key for US Dollar

Amidst a relatively data-light and holiday-shortened week, the high-tier United States economic data due for release on Wednesday will hog the limelight, as it could provide fresh hints on the US Federal Reserve’s interest rate outlook. The United States Durable Goods Orders for October are foreseen at 0.4% while the S&P Global Preliminary Manufacturing and Services PMis are seen heading into contraction for November. Softer economic data from the United States could bolster expectations of smaller rate increases in the coming months, with markets now pricing about 75% odds of a 50 basis points (bps) rate hike in December.

Meanwhile, the Federal Reserve November meeting minutes will be closely scrutinized too for fresh signals on the central bank’s future policy course, especially after Federal Reserve Chair Jerome Powell said at the November meeting press conference that the United States interest rates will go higher than earlier projected. Therefore, the Federal Reserve’s Statement of Economic Projections (SEP) alongside the Dot Plot chart will hold the key to determining the peak rate.

US Dollar fails to cheer China covid woes-led cautious mood

Despite a risk rally seen on Wall Street indices, investors stay cautious amid the pre-Fed minutes anxiety. However, China’s relentless rise covid cases and intensifying restrictive measures remain the main reason for the pause in risk-on trading in Asia so far this Wednesday. China's capital Beijing reported 388 symptomatic new locally transmitted COVID-19 infections and 1,098 asymptomatic cases for Nov. 22. Reuters reported that the Chinese city of Chengdu will conduct mass COVID-19 testing for its residents from Nov. 23 to Nov. 27. “In Shanghai, rules were tightened for people entering the city as the country grapples with a spike in COVID cases, sparking worries about its impact on the economy,” FXStreet’s Analyst Ross J. Burland explained.

The cautious risk tone fails to revive the safe-haven demand for the US Dollar, as the US Treasury bond yields extend losses despite a relatively hawkish commentary from the US Federal Reserve policymakers. Kansas City Fed President Esther George said on Tuesday, the Federal Reserve may need to raise interest rates to a higher level and hold them there to successfully bring down high inflation. Meanwhile, Cleveland Fed president Loretta Mester reiterated that getting inflation down remains critical for the central bank.

Gold price technical outlook: Daily chart

The wait for a bull flag confirmation almost seems over, as Gold price holds fort above the falling trendline resistance at $1,737 after closing in the green for the first time in five days on Tuesday.

Daily closing above the latter is critical to validate the bullish continuation pattern and revive the uptrend toward the three-month highs of $1,787. Ahead of that, bulls will face immediate hurdles at the psychological $1,750 level and this week’s high near $1,770.

The 14-day Relative Strength Index (RSI) is holding firmer above the midline, endorsing the bullish potential. Adding credence to a likely upside, the upward-sloping 21-Daily Moving Average (DMA) is on the verge of cutting the mildly bearish 100DMA from below, portraying an impending bull cross.

On the flip side, a strong cushion is seen at Monday’s low of $1,733, below which the falling trendline support at $1,712 will be tested. At that level, the 100DMA creeps in.  Further south, the bullish 21DMA at $1,708 will come into play, offering the last line of defense for the Gold price.

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.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD holds gains around 0.6800 on upbeat China's Caixin PMI

AUD/USD holds gains around 0.6800 on upbeat China's Caixin PMI

AUD/USD is trading close to 0.6800, as traders digest an unexpected increase in the Chinese Caixin Manufacturing PMI. The US dollar is licking its wounds on dovish Fed's Powell and the China reopening optimism. 

AUDUSD News

EUR/USD fades bounce off 100-SMA above 1.0400

EUR/USD fades bounce off 100-SMA above 1.0400

EUR/USD grinds higher past 1.0400, taking rounds to 1.0430 during early Thursday, as bulls await the key data/events after posting the biggest monthly jump since September 2010. The major currency pair struggles to extend the previous day’s U-turn from the 100-SMA.

EUR/USD News

Gold flirts with two-week top below $1,800 ahead of US PCE Inflation

Gold flirts with two-week top below $1,800 ahead of US PCE Inflation

Gold price seesaws near a two-week high surrounding $1,780 as buyers await the key US inflation signals during early Thursday. In doing so, the bullion price edges higher around the multi-day high, marked a few minutes before, during the three-day uptrend.

Gold News

TRON price faces major resistance at these levels, is a sucker's rally underway?

TRON price faces major resistance at these levels, is a sucker's rally underway?

TRON price (TRX) has retaliated considerably against the bearish onslaught witnessed in November. Despite the optimistic gesture, TRX price still faces significant barriers of resistance ahead. Traders should consider trading more conservatively near the current price levels.

Read more

December Santa rally springs alive

December Santa rally springs alive

U.S. stocks rose, hurtling ahead, putting those nasty thoughts of a bear market to bed as the December Santa Rally springs alive. Indeed investors are revelling in the afterglow of moderating Fed signals.

Read more

Majors

Cryptocurrencies

Signatures