Gold Price Forecast: Gold picks up momentum on dollar’s weakness
XAU/USD Current price: $1,815.50
- US Federal Reserve chief Powell is confident in economic progress, cautious with tapering.
- Wall Street is in recovery mode, lead by a bounce in the tech sector.
- XAU/USD is poised to extend gains once above $1,820.15, the immediate resistance level.
Spot gold trades around $1,816 a troy ounce, it's highest for this week. The greenback came under selling pressure following comments from US Federal Reserve chief Jerome Powell. In the hearings before the Senate amid his nomination for a second term, the leader of the US central bank mixed a hawkish view of the economy with a cautious approach to the reduction of the balance sheet.
After the FOMC Minutes from the December meeting sent investors into pricing in firmer tightening, his words today were seen as more dovish, as Powell said the balance sheet runoff could happen "perhaps later in the year." At the same time, he repeated that asset purchases will end in March and that inflationary pressures will likely extend well into this year, with the monetary policy adapting to needs.
The news helped stocks bounce, with Wall Street trading in the green at the time being, also helped by speculative interest buying tech shares after the latest sell-off in the sector. US government bond yields ticked lower, another sign of easing concerns that plays against the greenback.
Gold price short-term technical outlook
The daily chart for XAU/USD hints at a bullish extension, as the bright metal finally accelerated above its moving averages, with the 20 SMA about to cross above the 200 SMA. Technical indicators head firmly higher within positive levels, although still below their December highs. Nevertheless, there is room for additional gains should the metal overcome 1,820.15, the immediate resistance level.
In the near term and according to the 4-hour chart, gold is firmly bullish, bouncing from around its 100 SMA and currently above all of its moving averages, as technical indicators approach overbought readings.
Support levels: 1.809.50 1,798.30 1,782.60,
Resistance levels: 1,820.15 1,829.60 1,842.85
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
