The gold price is maintaining a small increase near week highs of $1,931 set on Tuesday. As bulls and bears continue to battle early Wednesday. The gold market is preparing for the return of US traders. Following an extended Independence Day weekend. As the minutes of the US Federal Reserve (Fed) June policy meeting are expected.
The US Dollar maintains its lead over the Federal Reserve Minutes.
Despite the thin market circumstances on July 4, the US Dollar (USD) managed to recover its footing. The market is on shaky ground across the board, owing to mounting recession worries. As the Federal Reserve is expected to maintain its rate rise path to manage inflation. The impact of Fed tightening is already wreaking havoc on US business conditions, with the country’s manufacturing sector contracting further in June, according to the most recent ISM data released on Monday.
The risk-averse market climate has curbed the recent rise in US Treasury bond rates. Propelling the price of non-yielding gold to new weekly highs. Despite robust US Dollar demand, gold sellers remained above the $1,930 barrier.
Risk-off flows continue to dominate early Wednesday trading. As fears of a resumption of the US-China trade war return after the US restricted AI chip exports to China. In response, China imposed temporary restrictions on the export of certain gallium and germanium goods beginning August 1. Meanwhile, US President Joe Biden’s government is reportedly planning to restrict Chinese enterprises’ access to US cloud computing services.
If trade tensions worsen, the US Dollar is expected to attract a flood of safe-haven bids, impacting on the USD-denominated gold price. The spotlight is also on the Fed Minutes, which are coming later in American trade for new insights on the Fed’s rate rise plan, which will eventually influence the Gold price direction ahead of the critical US employment data due later this week.
Gold Technical analysis
The gold price is still on course to confirm a bullish wedge. a daily close over the crucial falling trendline (wedge) resistance, which is now around $1922. After reaching new highs of $2080 in early April, gold has been trading within a falling wedge.
However, it remains to be seen whether gold bulls will regain upside traction, as a Bear Cross and negative Relative Strength Index (RSI) continue to call for caution.
Acceptance over the falling trendline resistance of $1,922 on a daily closing basis may pave the way for a new upsurge into the $1,950 level, where the slightly bullish 50-Daily Moving Average (DMA) is hanging. Prior to that, gold buyers may encounter severe resistance at the downwardly sloping 21 DMA at $1,934.
On the downside, the $1,910 low from Monday provides immediate support. The $1,900 critical level will be put to the test. The next support level is expected to be at the three-month low of $1,893.
