The gold price is building on Wednesday’s gains on Thursday as the US Dollar (USD) continues to suffer the consequences of a dovish US Federal Reserve policy statement.
US Treasury bond rates plummeted in response to dovish US Federal Reserve policy recommendations.
The gold market just required the dovish view supplied by the Federal Reserve on Wednesday. Following the predicted 25 basis point (bps) rate rise announcement. The Federal Reserve eliminated wording in its policy statement regarding “ongoing increases” in favor of “some more” raises that might be warranted as they examine the impact of the banking sector crisis on the economy.
Powell’s cautionary statements, along with the dovish outlook, caused a significant sell-off in US Treasury bond rates throughout the curve, ultimately crushing the US Dollar and pushing the USD-denominated gold price to daily highs. of $1,979. During the heavy selling, two-year US Treasury bond rates exceeded the critical threshold of 4.0%.
US Treasury Secretary Janet Yellen, on the other hand, provided a momentary boost to the safe-haven US Dollar. After fueling a fresh round of bank stock selling and instability fears by telling Congress. She hasn’t studied or discussed universal deposit insurance. Following that, the gold price fell. But it still managed to complete the day above the $1,970 round barrier.
In response to the financial market upheaval. Markets have begun to gamble that the Federal Reserve is on the verge of concluding its tightening cycle sooner than originally anticipated. As a result, the US Dollar has been under additional selling pressure in Thursday’s Asian trade. Driving the gold price back near the $2000 level.
Gold Technical Outlook
After the enormous increase caused by the Federal Reserve’s decision gold is charting a probable bull pennant on the daily chart.
To verify the bullish continuation pattern. Gold investors must see a daily candle stick close above the falling trendline resistance at $1,975.
A break to the upside will result in a test of Tuesday’s high at $1,985. Above which the $2,000 round figure will be attacked.
Bulls will need a decisive breach of the annual high at $2,010 to extend the current bullish momentum into the psychological barrier of $2,050.
If Gold bulls fail to maintain higher levels. Any retracements might push the intraday low at $1,965, beyond which the static support at $1,960 would be tested.
Further falls will expose the $1,950 level. The demand region has opened the way for a test of the falling trendline support at $1,926.
