The gold price is holding water over $1,800, with little strong directional push. Investors are becoming more cautious as the dust settles on the market volatility caused by US Federal Reserve (Fed) Chair Jerome Powell’s hawkish remarks. Nevertheless, gold dealers are avoiding any directional bets ahead of Friday’s important US Nonfarm Payrolls report.
Gold price appears susceptible in the face of hawkish Federal Reserve bets.
The gold market after a three-day negative trend, as the US Dollar (USD) and US Treasury bond rates stay elevated amid increased anticipation of a 50-basis point (bps) rate rise at the March 22 Federal Reserve meeting. Nevertheless, markets continue to price the Fed’s top rate at roughly 5.50%. The hawkish Fed rate rise prognosis gained credence when Fed Chair Jerome Powell backed the case for larger rate hikes if the incoming data supports quicker tightening during his two-day bi-annual appearance before Congress.
At the time of writing, the US Dollar Index is defending tiny bids just shy of 105.65, while the benchmark US 10-year Treasury note rates are fighting slight bids just shy of 105.65. Meanwhile, the gold price remained nearly constant on the day at $1,814.
The United States’ ADP Employment Change report for Wednesday came in at 242K, compared to 200K projected and 119K before. The US JOLTS Job Openings was 10.824 million in January, above predictions of 10.6 million. Good US job figures strengthened the argument for aggressive Fed tightening, allowing rates to remain higher for longer.
Gold Technical Analysis
The gold price is coiling up in a parallel channel, gaining momentum in preparation for a strong negative move below the crucial support of $1,808, where the bullish 100 DMA and the February 28 low meet.
A daily close below the latter will confirm the parallel channel collapse, implying a test of the psychological threshold of $1,800.
A sustained break below that level will set off a new downswing below the flattish 200-Daily Moving Average (DMA) around $1,775.
The 14-day Relative Strength Index (RSI) remains stagnant but well below the 50.00 mark, supporting the bearish consolidation.
On the upside, the gold price encounters the first barrier at the previous day’s high of $1,824, over which the $1,830 round figure may be tested. Gold buyers may be spotted at the bearish 21 DMA, which is now around $1,836.
