gold(XAUUSD) price has returned to $1,825.
Following Thursday’s strong reversal from near $1,850, gold(XAUUSD) price is extending its three-day negative trend on Friday. The purchasing demand in the US Dollar (USD) remains unabated in the face of aggressive US Federal Reserve (Fed) predictions. The US Dollar maintains its comeback from ten-month lows, as the American economy shows indications of resiliency in the aftermath of the recent good economic statistics.
Strong economic data in the United States keeps hawkish Federal Reserve bets elevated.
The heated Consumer Price Index followed the solid US Nonfarm Payrolls report (CPI). Furthermore, US Consumer Spending, as measured by Retail Sales, increased to 3.0% MoM in January, up from 1.8% expected and -1.1% before, while Core Retail Sales up to 2.3%, up from 0.8% expected and -1.1% previously. -0.9 is the reading. The Producer Price Index (PPI) for final demand fell less than predicted in January, to 6% from 6.5% in December. These optimistic US fundamentals have raised predictions that the Federal Reserve would raise interest rates further, with the peak rate likely to exceed 5.1%. Goldman Sachs has added another rate rise to its estimates, with a 25-basis point (bps) increase expected at each of its March, May, and June meetings.
The positive US economic statistics, paired with recent hawkish pronouncements from Federal Reserve policymakers, has increased the attraction of the US Dollar at the expense of the non-interest-bearing gold price. Treasury bond rates in the United States have also risen in response to expectations of a higher Fed target rate.
Gold(XAUUSD) Technical Analysis
Gold is fighting bullish commitments once again below the sliding trendline support-turned-resistance at $1,836. The shiny metal is preparing to fall below the horizontal trendline support from the January 5 low of $1,825. Daily closes below the latter are required to continue the decline towards the $1,800 mark.
The 14-day Relative Strength Index (RSI) is pointing south, reaching oversold territory, and so keeping bearish bets alive and well. Gold bulls, on the other hand, must regain a firm foothold above the declining trendline support-turned-resistance.
The previous day’s high of $1,845 will be the next target for buyers on their route to the psychological threshold of $1,850.
Further up, the crucial 50-Daily Moving Average (DMA) at $1,862 will be difficult to overcome.
