Gold price is extending the previous decline, undermined by the dollar’s demand. Thursday’s European Central Bank (ECB) monetary policy decision and US Consumer Price Index (CPI) data are set to highlight policymaker’s thinking about monetary stimulus. Meanwhile, gold’s four-hour chart paints a bearish picture heading into the key event risks, FXStreet’s Dhwani Mehta briefs.
Risks appear skewed to the downside for XAU/USD
“The greenback holds the higher ground, despite the market optimism, as investors resort to repositioning ahead of the all-important ECB announcement and US inflation release. These key events will shed light on the pace of global recovery and policymakers’ thinking about paring back stimulus.”
“If the US CPI print comes in hotter than the consensus of a 0.4% rise in May, it will ramp up the Fed’s tapering expectation, which will render negative for the non-yielding gold. The ECB could also hint towards dialling back of the emergency bond-buying programme.”
“Sellers could target the immediate support at the horizontal trendline connecting previous lows at $1881. A breach of the latter could trigger a drop towards the June 4 low of $1856. Ahead of that, a demand area around $1865 could offer some reprieve to the bulls.”
“Any recovery attempt could face stiff resistance around the $1891-$1895 region, where the 21, 50 and 100-simple moving averages (SMA) collide. Further up, the triangle resistance at $1900 will challenge the bullish commitments. The previous month high at $1913 is the level to beat for the optimists.”
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.