gold(XAUUSD) price is destined to test the bullish 50-day moving average around $1,849 per ounce.
On Monday, the gold(XAUUSD) price is attempting a shaky rebound effort near the $1,900 mark. After two days of heavy selling, gold purchasers are breathing a sigh of relief. The gold price fell to $1,860 early Monday, its lowest level in four weeks, as Asian traders returned to their desks and piled on the US Dollar (USD) in the aftermath of Friday’s US job data for January.
US jobs data outburst increases betting on additional Federal Reserve rate rises.
The US dollar climbed along with US Treasury bond rates as nonfarm payrolls increased by 517,000, above predictions of 185,000. The unemployment rate in the United States fell to 3.4% from 3.5%, defying projections of an increase to 3.6%. Other metrics of the US labor market report from the US Institute for Economic Research The Institute of Supply Management (ISM) Services PMI was likewise robust, raising forecasts of a higher terminal Federal funds rate, perhaps over 5.0%. The ISM announced on Friday that its non-manufacturing PMI rose to 55.2 in January from 49.2 in December.
The gauge of new orders received by service organizations in the ISM survey improved to 60.4 in January, while the measure of service industry supplier deliveries jumped to 50.0 from 48.5. US Dollar Index has retreated slightly from four-week highs of 103.22, allowing gold to launch a minor rebound.
US Dollar is supported by tensions between the US and China, but additional gains are unlikely ahead of Jerome Powel.
Meanwhile, amid heightened US-China geopolitical concerns, US Treasury bond rates have maintained their recent advances. The market atmosphere remains bleak as the new week begins. in the face of increasing US-China geopolitical threats. The administration of US President Joe Biden praised the Pentagon over the weekend for shooting down a suspected Chinese spy balloon off the US Atlantic coast. China reacted sharply, expressing “serious unhappiness” with the move and threatening to take “appropriate measures.” Should risk aversion intensify in the next day, US Treasury rates might fall dramatically as safe-haven flows into US government bonds grow, pulling the US Dollar down across the board.
Investors may potentially take gains on their USD long positions ahead of US Federal Reserve (Fed) Chair Jerome Powell’s address on Tuesday. As a result, the gold price recovery may gain traction only to be stifled by the Federal Reserve’s hawkish forecasts.
Gold(XAUUSD)Technical Outlook
Gold price succumbed to negative influences and finished Friday at $1,913, below the crucial short-term rising 21-Daily Moving Average (DMA).
Gold bears challenged the $1,860 demand region as unrelenting selling wiped away the important $1,900 support.
If selling activity returns, the yellow metal might resume its drop toward the four-week low of $1,860. The psychological level of $1,850 is considered as the next negative objective. The bullish 50DMA is hovering at that level.
The 14-day Relative Strength Index (RSI) has risen slightly but remains below the midpoint, indicating that the negative bias continues.
On the other hand, the gold price will face a significant resistance near the $1,900 level. Acceptance over the latter is necessary for recapturing the 21DMA.
