- Gold price targets $1890 once again as Treasury yields retreat.
- FOMC minutes revive tapering talk and spook investors.
- Crypto market volatility likely to keep gold underpinned.
Gold price (XAU/USD) witnessed a volatile session on Wednesday, initially falling to the $1850 zone before rebounding firmly to renew three-month highs of $1890. The pullback, however, lost legs, as the gold price once again retraced towards $1860.
The price of gold bounced back towards the $1900 mark after a risk-aversion gripped markets on a massive collapse across the crypto board. Investors flocked to safety in the traditional safe-haven gold, as most major crypto assets lost as much as 30% of their value during the crash. However, gold price took a U-turn and retraced almost entire gains after the FOMC April meeting’s minutes revealed the board members’ readiness to kick start the tapering debate in the upcoming meetings. The US dollar rallied alongside the Treasury yields on slightly hawkish FOMC minutes, with the 10-year rates climbing to weekly highs at 1.67%.
This Thursday, gold price is looking to extend the recovery from near the $1860 region amid a retreat in the US yields, as markets weigh in the implications of the FOMC minutes. Also, the persisting volatility in the crypto space keeps the buoyant tone intact around gold. However, the further upside appears elusive unless the $1900 mark is recaptured on a sustained basis. Also, the dollar and yield dynamics will remain in play amid a revival of the Fed’s tapering narrative. The US weekly jobless claims will be closely watched for near-term trading opportunities.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold price is trending within a rising wedge formation on the four-hour chart, having recovered from troughs near the $1808 region.
Gold bulls have managed to defend the lower boundary of the wedge, now placed at $1861 while the resistance aligns at $1892.
The price remains on track to test the abovementioned rising wedge resistance, as the Relative Strength Index (RSI) continues to hold firmer above the midline.
Also, the fact that gold price trades comfortably above the 21-simple moving average (SMA) at $1866 adds credence to the additional upside.
However, a breach of the 21-SMA could put the wedge support at risk once again. A four-hour candlestick closing below the latter could negate the near-term bullish momentum.
The next target in sight for the sellers is seen at the upward-sloping 50-SMA at $1846.
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 gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.