The price of gold(XAUUSD) is attempting to build on its last recovery over $1,800.
The gold(XAUUSD) price has extended its rebound from two-month lows of $1,807 into early Tuesday. The US Dollar is trying to find its footing in the face of low US Treasury bond rates and an optimistic market attitude.
Disappointing US durable goods orders come after consumer confidence.
The US CB Consumer Confidence data, which will be issued among other minority surveys, will be next in line for the gold price. All eyes are on the Consumer Confidence report from the US Conference Board (CB). The gold price staged a solid rebound on Monday after falling to its lowest level in two months earlier in the day. US Dollar bulls remained in control despite Friday’s hot US Core Personal Consumption Expenditures (PCE) Price Index and escalating geopolitical tensions between the West and China over Russia.
Nevertheless, the tide shifted against gold sellers in American trade when the top-tier US Durable Goods Order underwhelmed and revived questions about the United States’ ability to meet its obligations. The economy may experience a ‘soft landing,’ as the US Federal Reserve plans to keep interest rates higher for longer.
The headline US Durable Goods Orders fell 4.5% in January, compared to -4.0% predicted and 5.1% the prior month. With the report release, the US Dollar Index fell abruptly from multi-week highs of 105.36 to as low as 104.55, propelling gold to the $1,820 round number. The decline in US Treasury bond yields was also good news for non-yielding gold.
Concerns about a “soft landing” and aggressive Federal Reserve predictions, risk tone is still stronger.
The benchmark 10-year US Treasury note yield is still facing significant resistance just below the critical level of 4.0%. Nevertheless, additional gains in the gold price were limited since the US Federal Reserve is still expected to deliver three more 25 basis point (bps) rate rises. Strong US Pending House Sales data also had a role in limiting the gold price recovery. Federal Reserve officials’ speeches will also be eagerly watched for new trade impetus.
The market atmosphere remains positive ahead of the publication of US economic data, as investors continue to evaluate the possibility of a soft landing, particularly following Monday’s dismal US Durable Goods data and remarks from US Treasury Secretary Janet Yellen. Yellen told CNN News in an exclusive interview on Monday that she feels American inflation is too high, but that a soft landing is on the horizon.
The 0.20% advance in the US S&P 500 Futures reflects a firmer risk tone, while Asian shares follow Wall Street higher. The risk-on market profile is restricting the US Dollar’s recovery attempts, backing the gold price for another possible rise on Tuesday.
Gold(XAUUSD) Technical Analysis
On the daily chart, gold price is teasing a falling wedge formation after opening Tuesday above the falling trendline resistance at $1,814.
To verify the bullish reversal pattern, a daily close above the latter is required, with an immediate challenge of Friday’s high at $1,828 on gold buyers’ radars.
Farther higher, the $1,730 round figure will be retested, and above it, the previous week’s high of $1,846 will entice bulls back into the market. Nevertheless, with the bearish 14-day Relative Strength Index (RSI) and the bearish crossover of the 21 and 50-Daily Moving Averages (DMA) remaining in play, any recovery in the gold price is likely to be sold off at higher levels.
On the downside, critical support may be found around Monday’s low of $1,807, below which the price will fall. The $1,800 mark will be tested.
Further falls will put the bullish 100 DMA at $1,795 in jeopardy. The final line of defense for gold purchasers is the falling trendline (wedge) support, which is currently around $1,789.
