• Gold attracted some dip-buying on Wednesday and rallied nearly $20 from a multi-day low.
  • The risk-off impulse, sliding US bond yields, modest USD pullback extended some support.
  • Hawkish Fed expectations kept a lid on any meaningful upside ahead of Powell’s testimony.

Gold reversed an intraday dip to the $1,823 region, or a four-day low touched earlier this Wednesday and shot to a fresh daily peak during the mid-European session. The XAUUSD was last seen trading around the $1,840 region, with bulls now awaiting a convincing break through the very important 200-day SMA.

The overnight optimistic move in the equity markets fizzled out rather quickly amid worries that a more aggressive policy tightening by major central banks would pose challenges to the global economy. Adding to this, the supply chain disruptions caused by the Russia-Ukraine war and the recent COVID-19 outbreak in China have been fueling fears about a potential recession. This continued weighing on investors' sentiment and triggered a fresh wave of the global risk-aversion trade, which, in turn, offered some support to the safe-haven gold.

The anti-risk flow was reinforced by a steep decline in the US Treasury bond yields and held back the US dollar bulls from placing aggressive bids. Apart from this, some repositioning trade ahead of Fed Chair Jerome Powell's testimony before the Senate Banking Committee forced the USD to surrender its intraday gains, which further benefitted the dollar-denominated gold. That said, expectations that the Fed would hike interest rates at a faster pace to curb inflation kept a lid on any meaningful upside for the non-yielding yellow metal.

Hence, investors will closely scrutinize Powell's comments for fresh clues about the policy tightening path. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold. This makes it prudent to wait for a sustained move beyond a technically significant 200-DMA before traders start positioning for any further appreciating move for the XAUUSD.

Technical levels to watch

XAU/USD

Overview
Today last price 1836.83
Today Daily Change 3.87
Today Daily Change % 0.21
Today daily open 1832.96
 
Trends
Daily SMA20 1845.55
Daily SMA50 1869.92
Daily SMA100 1891.21
Daily SMA200 1843.41
 
Levels
Previous Daily High 1843.69
Previous Daily Low 1828.65
Previous Weekly High 1879.26
Previous Weekly Low 1805.11
Previous Monthly High 1909.83
Previous Monthly Low 1786.94
Daily Fibonacci 38.2% 1834.4
Daily Fibonacci 61.8% 1837.94
Daily Pivot Point S1 1826.51
Daily Pivot Point S2 1820.06
Daily Pivot Point S3 1811.47
Daily Pivot Point R1 1841.55
Daily Pivot Point R2 1850.14
Daily Pivot Point R3 1856.59

 

 

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