- Gold struggles with its rebound as DXY firms up with Treasury yields.
- Risk-aversion amid reflation fears offers some support to XAU/USD.
- Gold remains at the mercy of Treasury yields dynamics and Powell.
Gold (XAU/USD) reached fresh nine-month lows at $1702 amid a renewed uptick in the US Treasury yields, as the bond market turmoil resumed on Wednesday. Gold managed to recover some ground and finished the day at $1714, still losing significantly on a daily basis. The latest remarks from Chicago Fed President Charles Evans, citing that the recent rise in yields signaled optimism on the economic outlook, powered the latest leg up in the yields. Meanwhile, upbeat US ISM Services PMI outweighed the sluggish ADP jobs report, boosting the Treasury yields along with the greenback.
As risk-aversion continues to remain the main theme so far this Thursday, gold bulls are licking their bulls while attempting a tepid recovery. The surge in Treasury yields led to a sharp sell-off in the global stocks, as investors remain worried about a potential overheating of the economy. The US Senate delayed the start of debate on a $1.9 trillion stimulus bill until at least Thursday, which also added to the jittery market conditions.
In the day ahead, if the risk-off mood intensifies, it could bolster the haven-demand for the US dollar and limit the corrective pullback in gold. Also, traders are likely to remain cautious and would refrain from placing any directional bets on gold ahead of the Fed Chair Jerome Powell’s appearance scheduled today at 1705 GMT.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold’s four-hour chart shows that the price is trading in an extremely narrow range within a falling wedge formation, with a powerful resistance aligned at $1724.
A four-hour candlestick closing above that latter would validate a falling wedge breakout, calling for an extension of the recovery momentum.
Although the bearish 21-simple moving average (SMA) at $1729 could challenge the bullish commitments.
The next significant upside barrier awaits at the $1750 psychological level, above which the downward-sloping 50-SMA at $1764 could be probed.
The Relative Strength Index (RSI) edges lower towards the oversold territory, suggesting that the sellers could likely retain control in the near-term.
Therefore, a break below the $1700 level cannot be ruled, below which the critical $1692 support could be put to test. That level is the intersection of the 21-monthly moving average and falling wedge support on the said time frame.
Further south, the June 2020 low of $1670 will be on the sellers’ radars.
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 trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.