gold price is attempting another run towards $1,900.
This Wednesday, the gold(XAUUSD) price is trying another run above $1,900, building on its rebound from four-week lows of $1,860. The recent increase in the price of gold might be attributed to a widely weakening US dollar.
Federal Reserve Chair Jerome Powell slows the US Dollar resurgence.
On Tuesday, US Federal Reserve Chairman Jerome Powell took part in a moderated discussion at the Economic Club of Washington, DC. Following Friday’s sold US jobs report, markets anticipated Powell’s aggressive perspective on interest rate future. On Friday, nonfarm payrolls in the United States increased by 517,000, above predictions of 185,000. The unemployment rate in the United States fell to 3.4% from 3.5%, defying projections of an increase to 3.6%. The positive US job report has boosted predictions of a Fed rate hike over 5.0%.
Powell’s remarks were Not being perceived as hawkish enough prompted a strong sell-off in the US Dollar, halting its rebound from ten-month lows. Instead, markets applauded Powell’s remarks on disinflation, thinking that the start of the disinflationary process would push the central bank to reduce its rate raise campaign even more. Wall Street indices rose, improving market sentiment and dragging on the US dollar.
However, the US bond market resumed its meltdown, driving US Treasury bond rates to multi-week highs, limiting the gold price recovery.
Fed speak was in the spotlight due to a paucity of top-tier US economic data.
Furthermore, the gold price was hampered by Minneapolis Fed President Neel Kashkari’s hawkish comments. According to Kashkari, the Federal Reserve may need to boost interest rates to at least 5.4%. contain excessive inflation, but also noting that the strength of the US job market made a recession less likely. Looking ahead, with a lack of data from the United States, all eyes will be on Federal Reserve governors’ speeches for new advice on the world’s most powerful central bank’s monetary policy stance.
Later on, Wednesday, New York Fed President John Williams, Atlanta Fed Chief Raphael Bostic, and Governor Christopher Waller are scheduled to speak. Markets predict the Fed funds rate to peak slightly over 5.1% by June, according to US interest-rate futures.
Gold(XAUUSD) Technical Analysis
Following last week’s negative breach below the crucial short-term rising 21-Daily Moving Average (DMA), gold price is carving out a possible bear flag on the daily chart, presently at $1,912.
The 14-day Relative Strength Index (RSI) is rising but remains below the midpoint, indicating that gold sellers continue to have the upper hand.
However, the higher lows observed this week kept gold buyers optimistic about a significant comeback. It is worth noting that the gold price remains sensitive as long as the 21DMA barrier remains in place.
Gold must break through significant resistance around $1,885 to make a sustained upward rise. The $1,900 mark will be the next target for gold purchasers.
On the other hand, the four-week low of $1,860 provides immediate support. Below which the bullish 50DMA at $1,853 might come to the rescue. Acceptance below the latter will result in a new decline below the January 5 low of $1,825.
