Gold is holding to the significant 100-Daily Moving Average (DMA) around $1,964.
As investors prepare for the all-important US Federal Reserve (Fed) interest rate decision. Followed by Chair Jerome Powell’s press conference. Gold is holding to the significant 100-Daily Moving Average (DMA) around $1,964, consolidating the earlier bounce from six-day lows.
All eyes will be on Federal Reserve Chair Jerome Powell’s news conference.
The US Dollar (USD) is seeing renewed demand in Asia on Wednesday, halting the rise in gold prices. As US Treasury bond rates enter a period of upward consolidation. Ahead of the important US election. The Fed situation. Markets remain cautious and refrain from putting new bets on the US dollar and gold price. As Fed Chair Jerome Powell’s statements and the likely phrasing in the policy statement may increase volatility throughout financial markets.
The Fed is largely expected to raise rates by 25 basis points (bps) at its July meeting, and as a result. The Bank’s position on the interest rate path and the economy will be keenly studied. Affecting the direction of gold prices in the following weeks.
Recent evidence of economic resiliency in the United States kept expectations alive for another Fed rate hike beyond July. Especially after the US Conference Board Consumer Confidence rose to a two-year high of 117.0 in July. in the aftermath of a consistently tight labor market and declining inflation. The likelihood of a Fed rate rise halt in September has fallen to 79% from over 85% last week.
If Fed Chair Jerome Powell suggests a pause at the September meeting but leaves the door open for a rate rise later this year. His remarks would reignite hawkish expectations, sending the US Dollar higher at the expense of gold. However, if Powell hints at the conclusion of the Fed’s tightening cycle and expresses concerns about economic growth. The US Dollar may fall along with US Treasury bond rates.
“If Powell says the Fed is open to raising rates as soon as September,” He says. would terrify investors even more, sinking equities, melting gold, and supercharging the US dollar.”
Technical analysis
On the daily chart, gold price found acceptance above the 100-Daily Moving Average (DMA) support-turned-resistance at $1,964 after settling above the latter on Tuesday.
However, gold purchasers have been wary in the run-up to the Fed’s policy pronouncements. The gold price may catch a new bid wave toward the two-month highs of $1,988, above which the $2,000 barrier will be attacked again.
The 14-day Relative Strength Index (RSI) remains stronger above the midline, indicating that the upside for Gold price becomes more appealing.
If Powell maintains his hawkish tone and signals another rate rise this year, The gold price is likely to challenge the $1,947 50-day moving average. Below the latter, selling pressure is expected to increase, clearing the way for a test of the upward-sloping 21 DMA of $1,942.
For gold purchasers further south, the $1,930 round number will be the line in the sand.
