gold(XAUUSD) price bulls take a respite slightly around $1,950.
Gold(XAUUSD) is trading around its highest level in nine months at $1,949 in early Thursday trade, following a day of excellent two-way trading amid heightened volatility on Wednesday.
The gold(XAUUSD) price is watching crucial US developments for the next move. Buyers may be able to keep control.
The US Dollar (USD) is licking its wounds with US Treasury bond rates as the US Preliminary Gross Domestic Product (GDP) for the fourth quarter approaches.
The US GDP report is expected to have a substantial impact on risk sentiment, which will eventually influence US Dollar values. In light of the US economic forecast for the coming year, investors are expected to re-price Federal Reserve policy expectations. At the time of writing, the S&P 500 futures in the United States are slightly higher on the day, boosted by Tesla Inc. results. The electric vehicle (EV) behemoth posted fourth-quarter earnings of $3.7 billion, up 59% from the previous year, while revenues increased 37% to $24.3 billion.
Gold(XAUUSD) technical Outlook
After repeatedly testing the top border of a rising wedge formation this week, gold finally broke above it on a daily closing basis on Wednesday. The upper limit is currently set at $1,945.
The rising wedge’s inherent inclination is to produce a downward break. When a result, gold purchasers remain cautious, particularly as the first estimate of the United States Gross Domestic Product (GDP) is released.
If crucial US economic statistics disappoint, indicating a weakening in the American economy, the US Dollar might launch a significant comeback across the board. As a result, gold may prolong its corrective down to test the wedge support at $1,937. Gold sellers are likely to challenge the previous day’s low farther south At $1,920, below which a test of $1,900 is unavoidable.
Gold sellers, on the other hand, require a daily close below the bottom border of the rising wedge formation, which is now around $1,933, to confirm a negative break.
The 14-day Relative Strength Index (RSI) has returned to overbought territory, suggesting that the gold price correction may have further legs.
However, if US growth numbers discount recession worries, this might stimulate a risk rally on global markets and reduce demand for the safe-haven US Dollar. In such a case, gold might see a new rise over the psychological threshold of $1,950. Gold bulls’ next upward objective is expected to be at $1,958 in April 2022. A sustained advance above the latter will result in Bring the previous April high of $1,998 back into play.
