On Tuesday, gold(XAUUSD) price resumed its upward rise towards the three-week high of $1,858 after a brief decline the day before.
US dollar is licking its wounds, as are US Treasury bond rates.
The US Dollar (USD) is licking its wounds as traders hesitate from placing new bets ahead of the testimony of US Federal Reserve (Fed) Chairman Jerome Powell. Federal Reserve Chair Jerome Powell will appear before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday about the semi-annual monetary policy report. Powell is unlikely to provide any meaningful clues about the Federal Reserve’s policy direction ahead of Friday’s important Nonfarm Payrolls data from the United States and next week’s Consumer Price Index (CPI) report. Markets will try to read between the lines, which may alter their performance.
Cautionary optimism is dragging on the US dollar ahead of Federal Reserve Chairman Jerome Powell’s speech.
The pricing of Federal Reserve policy extends beyond March. Investors will pay particular attention to any signals on the amount of the March Fed rate rise, since markets are betting on a 50-basis point (bps) rate hike. Furthermore, Powell’s remarks may assist to reinvigorate expectations about the central bank’s terminal rate, which is now estimated to be around 5.50% following January’s astonishing US job statistics and hot Consumer Price Index data. The US Dollar has entered a phase of negative consolidation ahead of Federal Reserve Chairman Jerome Powell’s testimony, as the benchmark US 10-year Treasury bond rates remain plunged below the 4.0% critical level. This has helped gold purchasers to find fresh inspiration this Tuesday after observing a price increase. The market has corrected from three-week highs set at the start of the week.
Mixed sentiment in the US session overnight, as well as optimistic Factory Orders data from the US, failed to raise the US Dollar, as traders modified their USD holdings ahead of an eventful week. In addition to Fed Chair Jerome Powell’s statement, all eyes are on Friday’s Nonfarm Payrolls data from the United States for new policy direction.
Gold(XAUUSD) Technical Analysis
Gold(XAUUSD) bulls are hoping to mount a recovery from Monday’s challenge of the important bearish 21-Daily Moving Average (DMA) support around $1,844. The 14-day Relative Strength Index (RSI) is aiming for a sustained rise above the 50.00 mark and is currently trading neutral. If the recovery gains traction, the gold price might retest the multi-month high of $1,858.
The modestly bullish 50 DMA around $1,870 might be tested further higher. Valentine’s Day peak coincides with that level. Regaining control of the latter is key to maintaining the gold price rebound from two-month lows of $1,805.
A daily close below the 21 DMA, on the other hand, might signal a bearish reversal, opening the way for a test of Friday’s low of $1,835.
