gold (XAUUSD) price has dropped to its lowest level in two months, as the US dollar maintains its recent gains.
gold (XAUUSD) price is stabilizing slightly over $1,800, having fallen to its lowest level this year. Gold bears are taking a respite before the next leg down, as they anticipate a new set of US economic data for a lift.
US Treasury bond rates rise as a result of the Federal Reserve’s hawkish bets and geopolitical threats.
The US Federal Reserve’s preferred inflation indicator, the Core Personal Consumption Expenditures (PCE) Price Index, rose to 4.7% on Friday from 4.6% in January, above experts’ expectation of 4.3%. The main PCE Price Index increased 5.4% year on year in January, up from 5.3% in December. Another optimistic US economic data boosted hopes that the Fed’s interest rates will remain higher for longer, with three more 25 basis point (bps) rate rises expected in the year’s remaining meetings.
US dollar grabbed a new bid wave with US Treasury note rates on Friday, slamming gold to seven-week lows of $1,809. Hawkish Federal Reserve predictions tend to impact on the price of non-yielding gold. The newest events in the Russia-Ukraine conflict will be keenly monitored, particularly after the United States and the European Union slapped fresh sanctions on Russia on the first anniversary of the so-called Russian “special operation” in Ukraine.
Furthermore, the US continues to accuse China of providing lethal weapons to Russia, with National Security Advisor Jake Sullivan stating that “China’s stance on Russia’s invasion of Ukraine places it in a “awkward” international position, and any weapons support to Russia would come with “real costs.”
Meanwhile, China presented a peace plan on Friday, urging Ukraine and Russia to agree to a cease-fire and hold peace negotiations. According to CNN News, China claims to be impartial in the one-year-old battle. But, it has also stated that it has a “no boundaries relationship” with Russia. gold is trading at two-month lows of $1,807, set early Monday.
Following a brief period of consolidation, the US Dollar Index is seeing renewed demand. Increasing geopolitical tensions have investors looking for protection in the US Dollar, leaving the gold market vulnerable to more downside threats.
Following that will be US Durable Goods Orders and Pending Home Sales.
The focus now shifts to a new set of US economic statistics expected on Monday, which includes the top-tier Durable Goods Order and Pending House Sales figures. While the Federal Reserve continues to rely on data to determine its next policy move, the status of the American economy is crucial.
Gold(XAUUSD) Technical Outlook
Topping out at $1,960 on February 2, the gold price has maintained its downward while within a falling wedge shape, as shown on the daily chart.
After breaching numerous critical demand areas last week, gold is anticipated to challenge the falling trendline support around $1,794. The bullish 100-Daily Moving Average (DMA) coincides at that level.
Gold sellers will likely face significant resistance ahead of that level, around $1,800. The negative risks to the gold price remain intact, as the 14-day Relative Strength Index (RSI) continues to point south, remaining above the oversold region.
Furthermore, confirmation of a bear cross on Friday, represented by the 21 DMA crossing the 50 DMA from above, is expected to strengthen the negative tilt in the market. To try a substantial recovery, the gold price must close above the declining trendline resistance at $1,821 on a daily basis. As a result, the brilliant metal will experience an upside break from the collapsing wedge. On the way back, gold bulls will aim for the $1,830 round figure and Thursday’s high of $1,834.
