Share:
  • Gold price has stalled its impressive rebound from yearly lows.
  • Hawkish ECB-led and weak US data sparked recession fears.
  • Focus on yields and end-of-the-week flows, XAUUSD needs to defend $1,707.

Gold price is treading water above $1,700 on Friday, as bulls take a breather after an impressive turnaround witnessing from 16-month lows of $1,681. The US dollar index has found support once again near the 106.40 region, making it difficult for the bright metal to sustain its recovery mode. With the previous rebound, the bullion is on track to book its first weekly gain in six. Investors assess the implications of a more hawkish ECB outcome and encouraging quarterly earnings report but fears over an imminent global recession lurk ahead of Friday’s euro area, UK and US preliminary S&P Global Manufacturing and Services PMIs.

Despite the return of Russian gas flows to Europe via the Nord Stream 1 pipeline, the German and Eurozone remain on the brink of a contraction in their business activity. If the numbers disappoint, we could see a fresh round of risk-aversion globally, with the safe-haven flows back in the US dollar and the government bonds. The gold price recovery, therefore, could falter but the end-of-the-week flows will also have a pivotal role to play. Further, investors will readjust their positions into the weekly closing and ahead of next Wednesday’s Fed interest rate decision.

Also read: Gold Price Forecast:  Bears keeping XAUUSD in check

US Federal Reserve

Thursday’s solid recovery in the bright metal was mainly driven by the revival of global growth fears after the ECB delivered a bigger than expected 50 bps rate hike to combat soaring inflation. Further, weak US jobless claims and Philly Fed Manufacturing Index added to the economic slowdown concerns, underpinning the metal’s allure as a traditional safe haven. The number of Americans enrolling for unemployment benefits rose for a third straight week last week. Meanwhile, the Philadelphia Fed’s July factory output index contracted for the second straight month, with the gauge falling to -12.3. Risks to global growth heightened, as the Fed is set to hike the interest rates by 75 bps when it meets next week to decide on its monetary policy. This was reflected in the surge in the US bonds, as the Treasury yields fell sharply across the curve. The benchmark 10-year US rates dropped back below the key 3% level.

Gold Price Chart: Four-hour

After spotting a symmetrical triangle breakdown on the four-hour chart on Wednesday, Gold price extended the downside and hit the pattern target measured at $1,781.

As explained here, the metal did stage a solid comeback, helped by the oversold Relative Strength Index (RSI) conditions.

XAUUSD needs to defend the previous resistance now support of the 50-Simple Moving Average (SMA) at $1,714 for the upside to remain in place.

The RSI is now turning lower but holds above the midline, keeping bulls hopeful. The last line of defense for buyers is seen at the 21 DMA of $1,707.

A breach of the latter will reopen the downside towards $1,700 and the multi-months trough of $,1681.

On the flip side, a sustained move above the previous day’s high of $1,720, will revive the recovery momentum. Gold bulls will then aim for the July 18 high of $1,824.

The $1,830 round number will be put to test should the upswing gather steam.

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD rebounds from multi-week lows, trades above 1.0750

EUR/USD rebounds from multi-week lows, trades above 1.0750

EUR/USD came under heavy bearish pressure and declined to its weakest level in three weeks below 1.0750 on Friday after the stronger-than-expected Nonfarm Payrolls data. Week-end flows, however, helped the pair erase its daily losses.

EUR/USD News

GBP/USD remains on track to snap three-week winning streak

GBP/USD remains on track to snap three-week winning streak

GBP/USD recovered toward 1.2550 after coming in within a touching distance of 1.2500 in the second half of the day after Nonfarm Payrolls came in at 199,000 for November. Despite the recent rebound, the pair remains on track to snap a three-week winning streak.

GBP/USD News

Gold retreats below $2,020 as US yields push higher

Gold retreats below $2,020 as US yields push higher

Gold broke below its daily range and declined toward $2,010 with the immediate reaction to the upbeat US November jobs report. Although XAU/USD managed to recover toward $2,020, rising US Treasury bond yields triggered another leg lower.

Gold News

Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000

Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000

Bitcoin price just like other assets, is highly impacted by the macro-financial developments. This includes the Nonfarm Payrolls (NFP) report released by the BLS of the United States. 

Read more

The week ahead – Fed, ECB and Bank of England rate decisions

The week ahead – Fed, ECB and Bank of England rate decisions

When the Federal Reserve kept rates unchanged back in November for the second meeting in a row there was still the distinct possibility that the final meeting of 2023 would provide the possibility of one more rate rise to round off the year in line with Fed policymakers dot plot forecasts of 5.6%.

Read more

Majors

Cryptocurrencies

Signatures