- Gold Price runs into 200 DMA barrier once again as Treasury yields firm up.
- The US dollar licks its wounds, awaiting Fed Chair Powell’s testimony.
- Return of full markets in the US could bring volatility back in XAUUSD.
Gold Price is replicating the recovery moves seen in Asia on Monday, although the critical 200-Daily Moving Average (DMA) at $1,844 remains a tough nut to crack. The renewed uptick in the yellow metal appears capped this Thursday, as risk flows dominate and kill the demand for the US government bonds while lifting the Treasury yields across the curve. Rising yields make non-yielding gold less attractive. Investors assess the recent stock market sell-off worldwide, in the face of the central bank tightening and recession fears, awaiting Fed Chair Jerome Powell’s testimony for fresh hints on the world’s most powerful central bank’s next rate hike move.
Powell is due to testify before Congress on the Fed’s semi-annual Monetary Policy Report on Wednesday and Thursday. Should he sound confident on a 75 bps July rate hike, the dollar could resume its uptrend towards the two-decade highs. Gold price, therefore, could see a downside break from the ongoing range play, with eyes on the $1,800 threshold.
In the meantime, the second-tier US economic data could entertain gold traders while the Fed expectations and sentiment on Wall Street could provide fresh price action in the metal. US traders return from a long weekend, which could bring much-needed volatility in gold price trading once again.
XAUUSD vapored out a positive start to the week, as it ended Monday in the red amid the upbeat market mood and thinner liquidity. Broad-based US dollar weakness, however, cushioned the downside in the metal price. Growing concerns over a potential recession helped keep a floor under gold price.
Gold Price Chart: Daily chart
Technically, the near-term levels for gold price remain more or less the same, as traders yearn for a range breakout.
At the time of writing, bulls are struggling just below the 200 DMA at $1,844. The next strong resistance is seen at the mildly bearish 21 DMA at $1,847.
Buying resurgence above the latter could challenge the $1,850 psychological level. Daily closing above that price zone is need to take on the recent range highs near $1,858.
The 14-day Relative Strength Index (RSI) continues to trade flatlined below 50.00, suggesting that sellers are likely to keep control.
On the flip side, Friday’s low of $1,834 is the level to beat for XAU bears, below which a fresh downswing will kick off towards the $1,820 round level,
The June 16 low of $1,816 will be next on sellers’ radars. The rising trendline support at $1,809 is the line in the sand for gold optimists.
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