- Gold price is looking to shift its auction above $2,000.00 as the Fed doesn’t believe more rate hikes are appropriate.
- Further tightening of credit conditions by US banks would result in lower inflation, and cooling demand.
- Gold price is now marching towards the ultimate resistance plotted from August 2020 high at $2,075.32.
Gold price (XAU/USD) is oscillating in a narrow range of $1,990-2,000 in the early Asian session. The precious metal is struggling to shift its auction above the psychological resistance of $2,000. However, the upside looks favored as the Federal Reserve (Fed) has come closer to halting its policy-tightening cycle after eight consecutive hikes in the past year.
Fed chair Jerome Powell commented that some hikes might be appropriate to make the policy restrictive enough to tame the stubborn inflation. Also, it would not be worth hiking rates further in times when the United States economy is facing the fears of a potential banking crisis.
As the battle against stick inflation is still on, higher rates for a longer period will continue to weigh on persistent US inflation. Also, further tightening of credit conditions by commercial banks to avoid increment in Non-Performing Assets (NPAs) would result in lower inflation, cooling demand, and a dismal economic outlook.
Meanwhile, S&P500 futures showed some recovery on Thursday as investors are cheering that the economy is somehow clear about the terminal rate, which would help firms to design their strategy for further operations, portraying a risk-appetite theme. The US Dollar Index (DXY) defended the 102.00 support, however, the expression of fewer rate hikes ahead would maintain pressure on it.
On Friday, investors will keenly watch the US Durable Goods Orders data. As per the consensus, the economic data will expand by 0.6% against a contraction of 4.5%. Investors should be aware that the mighty Fed is not bound to stay on commentary and could continue its rate-hiking spell if forward demand continues to grow.
Gold technical analysis
Gold price has rebounded from the demand zone plotted in a range of $1,947-1,960 on a weekly scale. The precious metal is now marching towards the ultimate resistance plotted from August 2020 high at $2,075.32.
The 10-period Exponential Moving Average (EMA) will continue to act as a cushion for the Gold price.
Meanwhile, the Relative Strength Index (RSI) (14) has reclaimed the bullish range of 60.00-80.00. More upside looks solid as the momentum oscillator is not showing any sign of divergence and overbought situation.
Gold weekly chart
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