Gold is extending its recent rally toward $2,000, flirting with new two-month highs early Thursday. The US Dollar (USD) has fallen back into negative territory. Failing to capitalize on a cautious market attitude and an increase in US Treasury bond rates across the curve.
US dollar has returned to the red ahead of US data.
The US Dollar extended Tuesday’s rebound gains on Wednesday, causing gold prices to fall from near eight-week highs. Currency markets had a significant slump across the board. The Pound Sterling has led the way following weaker UK Consumer Price Index (CPI) data. Even though US Treasury bond rates fell and US housing statistics underwhelmed. This helped the Greenback launch a good return.
The US Dollar Index momentarily reclaimed the crucial level of 100.50. Sending gold prices lower to test the static support level of $1,970. However, in American trade, US Dollar sellers resumed as markets stayed upbeat. Ahead of Tesla Inc’s and Netflix’s quarterly releases, boosting gold prices back toward $1,980.
The US dollar is losing its comeback momentum as more Fed rate rise stall wagers are placed.
Investors have been cautious so far this Thursday, following mixed US earnings news after-market hours. Tesla Inc. set a quarterly revenue record but reduced profits as a result of price reduction and incentives. Netflix outperformed Wall Street expectations. In the third quarter, the company added 5.9 million members. Despite the dovish risk tone, the safe-haven US Dollar is losing momentum, as dovish US Federal Reserve (Fed) expectations operate as a significant headwind for the Greenback.
Markets broadly anticipate the Fed to stop its tightening cycle in September, following a projected 25 basis point (bps) rate hike in July. Investors are also considering the end of the Fed’s rate rise cycle after September, as inflation has slowed faster than predicted.
If the US Dollar resumes its decline ahead of the mid-tier United States weekly Jobless Claims and Existing Home Sales data, the gold price might extend its resumed higher later in the day. The Fed’s projections and US profits are likely to remain the key drivers. reports, which might have a substantial influence on market sentiment and the USD-denominated gold price.
Technical analysis
Gold price has blasted past a couple of important upward obstacles on its route to the $2,000 mark, as shown on the daily chart.
The 14-day Relative Strength Index (RSI) is approaching overbought area, indicating that there is still opportunity for more gains.
As a result, immediate resistance is expected around the May 17 high of $1,993, above which a test of $2,000 is unavoidable.
Acceptance above the latter on a daily closing basis is required to put bearish commitments at the $2,010 round level under pressure.
Any retracements, on the other hand, will encounter an initial impediment near the intraday low. of $1,976. Gold sellers must then break through the previous day’s low and important support level of $1,970.
If the decline gains power, a further dip toward the positive 100-Daily Moving Average (DMA) around $1,960 cannot be ruled out.
