Gold Price Analysis: XAU/USD fades bounce off weekly low on firmer US dollar
- Gold fails to extend corrective pullback from one-week low.
- Risk dwindles as covid, stimulus catalysts flash mixed signals.
- Powell’s press conference, FOMC statement will be the key amid status-quo expectations.
Gold retreats to $1,770, down 0.30% intraday, while heading into the European session on Wednesday. The yellow metal bears the burden of a stronger US dollar as it fizzles the bounce off the weekly bottom.
Hopes of US stimulus battle mixed catalysts concerning the coronavirus (COVID-19) and vaccinations to put a bid under the US dollar. Also supporting the greenback could be the market’s cautious sentiment ahead of the US Federal Reserve (Fed) monetary policy meeting, up for publishing amid late Wednesday.
That said, the US dollar index (DXY) regains the 91.00 threshold, up 0.15% intraday, during the second consecutive positive day by the press time. It should, however, be noted that the upbeat expectations over US President Joe Biden’s stimulus packages, both already proposed and likely to be tabled today, keeps the S&P 500 Futures mildly bid.
Elsewhere, markets remain jittery as Asia struggles with covid and doubts over AstraZeneca stay on the table despite the US approval usage. Further, expectations that Fed Chair Jerome Powell may not be able to defend the US central bank’s easy money policies for long also seem to help the US dollar.
It’s worth mentioning that inaction by the US 10-year Treasures after the longest daily winning streak in six weeks warrants gold traders to remain cautious ahead of the key event.
Read: Federal Reserve Preview: Will Powell power up the dollar? Three things to watch out for
Technical analysis
Gold justifies the previous day’s downside break of monthly support amid bearish MACD signals. However, an area comprising tops marked since March around $1,760–55, becomes the key support.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
