In Thursday’s trade, gold is consolidating its prior bounce while defending $1,930. The US Dollar (USD) is hovering at monthly lows, expecting new clues from US economic data and Fed speak.
Jerome Powell, Chairman of the Federal Reserve, comes to the aid of gold investors.
The testimony of US Federal Reserve (Fed) Chair Jerome Powell disappointed US Dollar bulls. As well as US Treasury bond rates, allowing gold to launch an amazing comeback on Wednesday. Powell revealed few surprises during his statement on the The Fed presented. Its Monetary Policy Report to the House Financial Services Committee. Repeating the message provided at the previous week’s policy meeting that future. US rate hikes are “a pretty good guess” of where the Fed is headed. If the economy continues in its current course.
Markets had priced in further hawkishness from the Fed chairman. Thus his remarks caused a US Dollar sell-off, with the US Dollar Index hitting new monthly lows of 102.00. While gold prices rose strongly from three-month lows of $1,919. Despite Powell’s normal message that higher rates would be maintained for a longer length of time. US markets fell. The Wall Street sell-off did not provide relief to the safe-haven US Dollar.
Earlier in the day, in anticipation of Powell’s appearance, Markets remained risk adverse. Buoying sentiment around the US dollar, driving gold prices down to a low of $1,918 on March 17. The gold price was also pushed down by predictions of more tightening by global central banks. Particularly after the hot UK Consumer Price Index (CPI) inflation data bolstered the Bank of England’s (BoE) hawkish forecasts.
However, the Bank of England policy decisions on Thursday will have a huge influence on risk sentiment, impacting the US Dollar and Gold markets. The Bank of England (BoE) is largely expected to raise interest rates by 25 basis points (bps) to 4.75%, but the BoE’s stance on future rate rises and vote composition will be extensively scrutinized for new hints.
Jobless Claims and Existing home sales data will be scrutinized.
Additionally, the weekly Jobless Claims and Existing home sales data will be scrutinized alongside the second day of Fed Chair Powell’s speech. Powell will appear before the Senate Banking Committee on Thursday and is anticipated to repeat his remarks from Wednesday. Later in American trade, two additional Fed members will speak, with any hawkish statements likely to drive a US Dollar rally at the cost of the gold market.
Technical analysis
Gold price challenged the March 17 low of $1,918 after breaching the one-month-old range to the south on Tuesday, falling below the crucial 100-Daily Moving Average (DMA) at $1,942.
Gold purchasers, on the other hand, surged towards multi-month lows on bargain shopping, pushing rates back towards the latter. Acceptance rate more than 100 DMA is required to begin any significant healing efforts.
The 14-day Relative Strength Index (RSI) remains negative, explaining the gold price’s bearish potential. As a result, a retest of the March 17 low of $1,918 seems likely, below which a new decline towards $1,900 would begin. Prior hitting the $1,910 round mark, gold purchasers may find some reprieve.
If a drop occurs, gold price might aim for the bearish 21 DMA at $1,952 on a sustained break above the 100 DMA at $1,942. Further higher, the $1,960 level may put the bearish pledges to the test.
