Gold is off two-month lows of $1,896, aiming to regain territory over $1,900 early Wednesday. The US Dollar (USD) has entered an upward consolidative phase. Allowing gold purchasers to exhale a sigh of relief. Ahead of mid-tier US housing statistics and the US Federal Reserve (Fed) Minutes from the July meeting.
The gold price remains sensitive as the US dollar remains popular.
The US Dollar is in a familiar range, consolidating gains made in the first half of the week. Gold price recovery attempts are being constrained. The US dollar is gaining from its safe-haven appeal as investors remain anxious. About the global economic growth outlook, particularly in light of China’s recent poor reports.
“China reported July data that broadly missed expectations,” according to CNBC News. The National Bureau of Statistics (NBS) report also omitted the data for youth unemployment, which has reached new highs in recent months. Fears that China’s declining post-Covid economic recovery would have spillover consequences on the rest of the globe, especially the US economy, prompted investors to flee riskier assets like as stocks and rush to the protection of the US dollar.
The global stock market sell-off accelerated According to the sales data, the country’s consumer spending increased faster than projected. Following the strong US retail trade report, markets began betting on additional Fed tightening, implying a stronger US economy and more pain for the non-interest-bearing gold price.
Looking ahead, the negative risks for gold remain intact, owing to a bearish technical setup on the daily chart and unsettled markets ahead of the eagerly awaited Minutes from the July Fed meeting, which could shed new light on the Federal Reserve’s future policy course. Meanwhile, the US housing data will be widely watched, as the Fed continues to base its policy decisions on data.
Technical analysis
For the first time since March, the gold price closed below the 200-day moving average (DMA) at $1,905 on Tuesday. December 15, 2022, implying that it could be the start of a new decline in the future months.
The downward-sloping 21 DMA is expected to cut the 50 DMA from above, confirming a Bear Cross on a daily closing basis, lending credence to the bearish potential in gold price.
The two-month low of $1,896 is considered as immediate support, below which the June 29 bottom of $1,893 will be tested. If the latter is broken consistently, the March 15 low of $1,886 will be revealed.
Meanwhile, any decrease in the price of gold will be viewed as a good selling opportunity. To begin a significant rebound, the gold price must break beyond the $1,920 round figure. The next upside objective might be $1,930.
