- Gold Price holds the rebound amid weaker Treasury yields, upbeat mood.
- The US dollar stages a solid recovery, with end-of-the week flows likely in play.
- XAUUSD flirts with 200-DMA while RSI remains bearish on the daily chart.
Defying bearish expectations, Gold Price extended the previous rebound and stormed through the critical 200-Daily Moving Average (DMA), now at $1,838 after lurking below the latter so far this week. The bright metal jumped as much as 1.5% to test the $1,850 barrier before easing to settle the day at $1,842.
Fears over growth and raging inflation gripped the markets, knocking down riskier assets while boosting the demand for the traditional safe haven assets such as gold, US Treasury bonds and the yen. Increased risk-off flows into the US government bonds dragged the rates lower across the curve, which, in turn, triggered a fresh downswing in the dollar. Gold Price, therefore, benefited, as the greenback resumed its correction from two-decade highs alongside falling yields.
The solid rebound in XAUUSD saw the price move further away from the four-month lows reached at $1,787 on Monday. Adding to the economic concerns, the weekly US jobless claims and the Philly Fed Manufacturing Index missed expectations, boding ill for the buck.
Gold Price is headed for the first weekly gain in five weeks this Friday, despite posting small losses, in the wake of a sharp rebound in the US dollar. The dollar recovers its ground even though risk sentiment remains in a fairly better spot, with the S&P 500 futures up 0.65% on the day. Bulls, however, could find some comfort from the extended weakness in the US yields even though Minneapolis Fed President and the most dovish policymaker Neel Kashkari came out hawkish, citing that “the Fed may need to be more aggressive.”
With another data-scarce US calendar this Friday, all eyes will remain on the market’s risk perception and the price action surrounding the yields and the dollar for tracking gold moves. The end-of-the-week flows could also come into play, triggering wild swings in the price of the bright metal.
Gold Price Chart: Daily chart
The Doji candlestick formation on Wednesday, following Tuesday’s decline, likely suggested that bears were losing control.
This paved the way for the renewed upside in Gold Price on Thursday, which fuelled a bullish break from the descending trendline resistance at $1,808 on a sustained basis.
The upside breakout and the subsequent daily closing above the 200-DMA reinforced the bullish interests.
Although it remains to be seen if bulls can retain control, as the 14-day Relative Strength Index (RSI) continues to inch lower below the midline.
Should the 200-DMA, now support, cave in once again, then Wednesday's high at $1,825 will emerge as the next cushion for gold buyers.
Further south, the $1,810-$1,808 demand area will then come into play, below which the trendline resistance now support at $1,798 will be probed.
Alternatively, five-day highs of $1,849 will be retested on buying resurgence, reopening the upside towards the bearish 21-DMA at $1,862.
All in all, gold price is likely to keep its choppy trend intact around the 200-DMA heading into the weekly closing.
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