- Gold remains vulnerable amid Covid woes, Fed’s aggressive tightening bets.
- US ISM Services PMI eyed while Fed sentiment will lead the way.
- Gold’s 4-hour technical setup points to a decline towards the key $1,795 support.
Gold price saw good two-way businesses on Wednesday, as traders enjoyed a roughly $20 intra-day movement amid a return of volatility and full markets. The yellow metal rallied hard and almost tested $1,830 in the first half of the day, as the US dollar tumbled, in anticipation of the FOMC minutes and amid Omicron optimism. The greenback failed to take advantage of a strong US ADP print, which saw the American private sector adding 807K jobs in December vs. 400K expectations. On the release of the hawkish FOMC minutes, the tide turned in favor of gold bears, as the metal witnessed a sharp retracement towards the $1,800 mark.
The December Fed meeting’s minutes showed that the officials discussed faster tightening to contain the inflationary risks while also beginning its balance sheet reduction. The dollar rebounded in tandem with the Treasury yields, as expectations ramped up on aggressive tightening by the world’s most powerful central bank. The benchmark 10-year US rates recaptured the 1.70% level, hitting the highest level since April 2021. Gold price, however, found some temporary respite from the post-Fed minutes tech sell-off on Wall Street, as it settled the day at $1,810.
Gold price is extending the previous slump towards $1,800 on Thursday, with bears reigning in ahead of the US Services PMI release. The US dollar and yields hold firmer amid broad risk-aversion, triggered by concerns over coronavirus contagion and the Fed’s hawkishness. The Fed sentiment will lead the way and keep the downside exposed for gold price. If the risk aversion deepens, it will further strengthen the dollar’s recovery even though the rally in the yields falter. In any scenario, gold is likely to remain on a losing end, with every upside to be seen as a good selling opportunity ahead of Friday’s US Nonfarm Payrolls release.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold’s 4-hour chart paints a bearish picture in the near term. Having breached the 50-Simple Moving Average (SMA) at $1,812 in the overnight trades, gold bears are now targeting the upward-sloping 100-SMA at $1,802.
The descent in the Relative Strength Index (RSI) below the central line is adding credence to the potential downbeat view on the bright metal.
A failure to resist the 100-SMA cap will expose the bearish 200-DMA support at $1,795. Sellers will then aim for the December 29 low of $1,789 on persistent downward pressure.
On the flip side, strong resistance appears around $1,812, the confluence of the 50 and 21-SMAs.
Any recovery attempt could gain traction if the latter is taken out on a four-hourly candlestick closing basis.
The next stop for gold bulls is envisioned at the $1,820 round figure, above which Wednesday’s high could be retested.
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
AUD/USD bulls await Aussie wage announcements, US NFP on the way to 0.6600
AUD/USD buyers take a breather at the weekly top, making rounds to 0.6565-75 after rising the most in seven weeks the previous day. The Aussie pair cheered the broad US Dollar weakness and upbeat catalysts from the biggest customer China the previous day to post a stellar run-up.
EUR/USD bulls need validation from 100-day EMA and US NFP
EUR/USD seesaws around 1.0760 during Friday’s sluggish Asian session, after rising the most in nearly two months the previous day. In doing so, the Euro pair portrays the pre-NFP consolidation amid a cautious mood and a light calendar, as well as mixed technical catalysts.
Gold run-up approaches $2,000 as United States Nonfarm Payrolls loom
Gold remains on the front foot at the weekly high, making rounds to $1,975-77 amid early Asian session on Friday following the two-day uptrend. With this, the yellow metal braces for the first weekly gains in four amid broad weakness in the United States Treasury bond yields and US Dollar.
Token unlocks trouble the market despite the events’ role in project stability
Token unlocks help maneuver volatility in the market as the releases bring opportunities for increased liquidity and, therefore, potential gains. Nevertheless, akin to the laws of demand and supply, the events lead to a fall in crypto prices for some assets.
ISM: Just about every measure of activity slowing... except hiring
Today's May ISM shows the fastest rate hikes in a generation are slowing just about everything in the manufacturing sector except the pace of hiring.