Despite the not-so-dovish Fed-induced gold’s decline, gold managed to close the day in the green above $1950. The focus is now on the US fiscal stimulus talks and Initial Jobless Claims. Technically, XAU/USD finds solid support at the $1932 50-DMA support, as FXStreet’s Dhwani Mehta notes.
“The world’s most powerful central bank pledged to keep rates lower for longer while increasing tolerance for higher inflation. Fed’s projection of faster recovery in the economy and jobs market pushed the Treasury yields higher alongside the dollar. Fresh hopes of the US Congress reaching a fiscal stimulus deal also underpinned the greenback.”
“Gold could see a fresh leg lower, as the European traders hit their desks and react to the Fed optimism, emboldening the dollar bulls. Although the downside could be limited if the sentiment improves on Wall Street and weighs on the dollar’s move higher. The US Initial Jobless Claims will be also closely eyed later on Thursday.”
“The bulls are likely to find strong support at the upward-sloping 50-DMA at $1932. Therefore, a tepid bounce from that level cannot be ruled out. A daily closing above the $1950 level also keeps the buyers hopeful.”
“The 14-day Relative Strength Index (RSI), currently at 48.84, continues to paint a bearish picture. A daily closing below the 50-DMA support is needed to confirm the bearish reversal. Sellers would then target the critical support around the $1905 region.”
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