- Gold in bullish consolidation just below $1750 ahead of Powell’s speech.
- DXY drops with Treasury yields amid solid bond auction and upbeat US CPI.
- The 4H chart suggests that XAU/USD is primed for a falling wedge breakout.
Gold (XAU/USD) staged an impressive bounce from six-day lows of $1724 on Tuesday, helped by a sharp sell-off in the dollar that ensued after an uptick in the US Consumer Price Index (CPI) data for March. The inflation report failed to re-ignite inflation fears and boost Fed tapering expectations, weighing negatively on the greenback alongside the Treasury yields. Further, solid demand for a 30-year bond auction deepened the sell-off in the US rates, exacerbating the pain in the buck. However, the rebound in gold remained capped by another record close on Wall Street indices.
So far this Wednesday’s trading, gold is consolidating the recent recovery rally below $1750, awaiting Fed Chair Jerome Powell’s speech, due later in the day, for fresh trading impetus. With upbeat US PPI and CPI data, the expectations of higher inflation will continue to support the inflation hedge, gold. Meanwhile, a pause in the use of Johnson & Johnson's COVID-19 vaccine weighs on the market mood, keeping gold afloat.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold’s four-hour chart shows that the price is on the verge of the breakout out of a falling wedge breakout, with a four-hour candlestick closing above the falling trendline resistance at $1748 eyed to confirmed the bullish continuation pattern.
The next stop for the XAU bulls is seen at the $1750 psychological level, beyond which the April 8 high at $1759 could be tested.
The Relative Strength Index (RSI) has turned flat but holds well above the midline, suggesting that the bulls are likely to remain in control.
Any pullback will see the downward-sloping 21-simple moving average (SMA) at $1741 guarding the downside.
Acceptance below the latter could expose the bullish 50-HMA support at $1738.
Thursday’s U-turn occurred after Gold bulls faced rejection below the 100-SMA at $1745.
The Relative Strength Index (RSI) has turned flat while holding above the midline, suggesting that the XAU buyers still remain hopeful.
To the upside, Thursday’s high at $1739 could be probed again, above which the 100-SMA remains on the buyers’ radars. The next stop for the bulls is seen at $1760, the March 1 high.
Further south, strong support is seen around the $1730-$1727 zone, which is the confluence of the 100 and 200-HMAs.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.