- Gold Price remains heavy below $1,900 amid persistent US dollar strength.
- US Q1 GDP awaited but it is unlikely to deter the Fed’s tightening outlook.
- XAUUSD tests 100-DMA, with more downside exposed towards $1,850.
Gold Price resumed its downtrend on Wednesday, reversing Tuesday’s temporary pullback, as the buying interest around the US dollar remained unabated amid varied factors. Gold Price hit the lowest level in two months at $1,881, having failed to resist above the $1,900 mark. In doing so, the bright metal lost $20, yielding a close below the March 29 low, as investors sought refuge in the safe-haven dollar, in the wake of a slump in the euro, as well as, the yen on regional issues. The Russia-Europe energy crisis smashed the euro, as the Russian government blackmailed Poland and Bulgaria with gas supplies cut off until they pay in roubles while the EU pledged a coordinated response.
On the yen side of the story, markets widely expected the Bank of Japan (BOJ) to stick with its ultra-dovish monetary policy stance, which battered the local currency, collaborating with the upside in the dollar. The US dollar index reached fresh five-year highs at 103.28, up over a big figure on the day. Meanwhile, risk sentiment somewhat stabilized, as the Wall Street indices staged a modest bounce, which also exacerbated the pain in XAUUSD.
Heading into the US Q1 GDP showdown, Gold Price is licking its wounds near fresh two-month lows near $1,880. The greenback remains elevated at multi-year highs before resuming the next upswing. Meanwhile, the market mood remains buoyed by Shanghai's reopening optimism and on reports that EU energy firms are preparing to pay for gas in roubles. The US Treasury yields are finding bids amid underlying expectations of more aggressive Fed rate hikes, as attention turns towards the all-important preliminary release of the US Q1 growth figures. The American economy is seen expanding 1.1% QoQ in Q1 vs. 6.9% previous. The US GDP data is unlikely to deter the Fed’s rate hike path, which is likely to keep the downbeat tone around Gold Price intact going forward. -
Gold Price Chart: Daily chart
Gold’s daily chart shows that Wednesday’s sell-off has breached the rising trendline support at $1,901 convincingly, opening floors for more declines in the coming days.
The 14-day Relative Strength Index (RSI) is pointing lower below the midline, suggesting that the downside potential remains in place.
Adding credence to the negative bias is a bear cross validated on the said time frame, as the 21-Daily Moving Average (DMA) cut the 50-DMA for the downside.
The immediate support of the rising 100-DMA at $1,876 appears at risk, below which the February 17 low of $1,868 remains on sellers’ radars.
A fresh downswing could be kicked off below the latter, exposing the $1,850 psychological level.
On the flip side, if the 100-DMA support holds, then a brief pullback towards the March 29 low of $1,890 will be inevitable.
The next critical barrier for bulls aligns at $1,900, above which the previous day’s high of $1,907 could be challenged again.
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