- Gold price retreats from one-month high but defends a bullish chart pattern.
- Fears of US government gridlock, China covid woes weigh on XAUUSD prices of late.
- US inflation, risk catalysts will be important for fresh impulse.
Gold price (XAUUSD) pares recent gains around a one-month high, pressured near $1,708 during early Wednesday morning in Europe. In doing so, the bright metal portrays the market’s anxiety amid the early results of the US mid-term elections. However, an immediate bull flag chart pattern keeps the buyers hopeful ahead of the key US Consumer Price Index (CPI) data, up for publishing on Thursday.
Given the escalating fears of the US government gridlock due to the latest updates from the mid-term elections, the US dollar pares losses near the seven-week low while snapping a two-day downtrend. That said, the US Dollar Index (DXY) prints mild gains around 109.70 by the press time.
Additionally weighing the XAUUSD price could be the fresh covid woes from China. That said, China reports the highest levels of new COVID cases in six months, with the latest addition of 8,335 for November 08, while marking a fresh virus-led lockdown in Guangzhou’s second district.
It’s worth noting, however, that the previously downbeat comments from the Fed policymakers and softer US data, as well as the bull flag on the hourly chart, keep the gold buyers hopeful. That said, the S&P 500 Futures struggle to track Wall Street’s gains while the US 10-year Treasury yields probe bears after snapping a four-day downtrend the previous day.
Moving on, gold traders may closely observe political and covid updates for fresh directions ahead of Thursday’s US inflation data. Should the Republicans gain victory in at least one of the two houses, the metal may witness further downside. However, a likely easing in the US CPI could defend buyers afterward.
Technical analysis
Although MACD teases a bear cross as the gold prices step back from the monthly peak, the yellow metal defends the bull flag chart pattern and keeps the buyers hopeful unless the quote stays beyond $1,705 support.
Even if the bullion breaks the $1,705 support, the $1,700 threshold and a one-week-old ascending trend line, near $1,678, could challenge the XAUUSD downside.
Alternatively, an upside clearance of the $1,715 hurdle will trigger a fresh leg toward the north and highlight the theoretical target of $1,765. However, October’s peak of $1,730 and September’s high near $1,735 could test the bulls on their way.
Overall, gold price remains firmer unless breaking the $1,680 support.
Gold: Hourly chart
Trend: Further upside expected
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.
Recommended content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.