- Gold price looks to resume the recovery towards $1,750.
- Recession fears dominate ahead of the Fed and US earnings.
- Recent weakness in yields, 4H technical setup remain supportive.
Gold price is reversing an early dip but remains cautious at the start of the critical Fed week. The rebound in the US dollar from over two-week lows capped the bullion’s ongoing recovery momentum. The greenback climbed on the back of renewed risk-off flows, triggered by a revival of recession fears, as the Fed remains on track to hike rates by 75 bps to control inflation. Investors remain worried over a potential negative US GDP print in the second quarter, which would tip the world’s largest economy into a technical recession.
Additionally, traders remain ahead of earnings from the tech giants such as Google’s Alphabet Inc. and technology titan Apple Inc. The aggressive Fed tightening path could weigh negatively on the tech titans, significantly impacting the market mood, dollar valuations and, in turn, the gold price.
Also read: Gold, Chart of the Week: XAU/USD bulls are moving in trying to catch the falling knife
The bright metal extended its recovery from 16-month lows and hit fresh weekly highs at $1,739 on Friday, tracking the slump in the US Treasury yields, as growth and inflation worries sapped investors’ confidence and boosted the safe-haven flows into the government bonds. The broad risk-aversion also helped the dollar stage a late rebound from two-week lows. A contraction in the eurozone and German business PMIs combined with dwindling US services sector activity amplified recession risks and weighed negatively on risk sentiment.
Gold price technical outlook: Four-hour chart
Having tested the 100-Simple Moving Average (SMA), now at $1,738 on the four-hour chart last Friday, gold price has entered a phase of upside consolidation. The bright metal is gathering strength for a sustained move above the latter.
The 21 SMA is approaching the 50 SMA to potentially validate a bull cross in the upcoming sessions. The Relative Strength Index (RSI) is pointing north above the midline, suggesting that there is some room for the recovery to extend.
Above 100 SMA, bulls will aim for the horizontal targets aligned at $1,745 and $1,752.
After spotting a symmetrical triangle breakdown on the four-hour chart on Wednesday, gold price extended the downside and hit the pattern target measured at $1,781.
On the flip side, if bears take out strong support around $1,713, the confluence zone of the 21 and 50 SMAs, then a drop towards the $1,700 mark cannot be ruled out.
The multi-month troughs of 1,681 will be back on XAU 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
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price keeps its range around $2,330, awaits US PCE data
Gold price is consolidating Thursday's rebound early Friday. Gold price jumped after US GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the Fed could lower borrowing costs. Focus shifts to US PCE inflation on Friday.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.