Gold (XAU/USD) witnessed another attempt to the upside on Wednesday and tested the record highs of $1981.34 after the US Federal Reserve (Fed) struck a dovish tone. On Thursday, the yellow metal is easing, as the Fed’s dovishness lifted the sentiment on the global markets, although the optimism was capped by the US fiscal wrangling and nervousness ahead of the key US Q2 Preliminary GDP report, due later today at 12:30 GMT. What’s more, technical set up points to further correction, FXStreet’s Dhwani Mehta briefs.
“Markets have already priced-in the terrible GDP report and dovish Fed. Therefore, the bright metal could likely see ‘Sell the fact’ trading in play on the data release, as the greenback could attempt a comeback amid resurgent safe-haven demand. The focus will also remain on the impending US stimulus talks and fresh virus updates.”
“The retracement from post-Fed highs and the subsequent consolidation around $1965 has carved out an ascending triangle formation on the hourly chart. The pattern will get validated should the price close the hour below the rising trendline support at $1957. The immediate cushion is aligned at the horizontal 50-hourly Simple Moving Average (HMA) at $1953.”
“A break below which the upward sloping 100-HMA at $1937 could likely offer some respite to the XAU bulls. The hourly RSI has turned south and looks to pierce through the midline from above, indicating that the downside appears more compelling.”
“If the bulls manage to defend the critical 21-HMA at $1962.65, a bounce-back towards the confluence of the record highs and the horizontal trendline resistance just above $1981 cannot be ruled.”
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