In the early trade on Wednesday, the price of gold is holding steady while trying to maintain the positive trend. Gold traders prepare for a fresh batch of crucial economic data from the United States (US) Federal Reserve (Fed) November meeting minutes (FOMC minutes) as well as a favorable daily technical setup, a broadly weaker US Dollar (USD), and the yields on US Treasury bonds.
The minutes of the Federal Reserve’s November meeting will also be closely examined for any new cues regarding the direction of future monetary policy, particularly in light of remarks made by Federal Reserve Chair Jerome Powell during the press conference following the meeting that indicated US interest rates would rise sooner than anticipated.
The key will therefore be found in the Dot Plot chart and the Statement of Economic Projections (SEP) from the Federal Reserve. Even though US Federal Reserve members have made somewhat aggressive comments, the cautious risk tone fails to reinvigorate the safe-haven demand for the US Dollar, and US Treasury bond yields continue to decline.
Esther George, president of the Kansas City Fed, stated on Tuesday that in order to successfully lower high inflation, the Federal Reserve may need to boost interest rates to a higher level and maintain them there.
Loretta Mester, head of the Cleveland Federal Reserve, reaffirmed that the central bank must continue to focus on bringing inflation down.
Gold Technical Analysis
After Tuesday’s ending in the green for the first time in five days, the wait for a bull flag confirmation almost looks over as Gold price maintains firm above the falling trendline resistance at $1,737. To confirm the bullish continuation pattern and restart the uptrend toward the three-month highs of $1,787, a daily closure above the latter is essential. Bulls will first encounter difficulties at the psychological $1,750 level and this week’s high close to $1,770.
The potential for a bull run is supported by the 14-day Relative Strength Index (RSI), which is holding steadily above the midline. The upward-sloping 21-Daily Moving Average (DMA) is about to cross the somewhat bearish 100-Daily Moving Average (DMA) from below, indicating an oncoming bull run, supporting a potential upward.
The declining trendline support at $1,712 will be tested if prices drop below that level, which is where a solid cushion is shown at Monday’s low of $1,733. At that point, the 100DMA begins to appear.
The bullish 21DMA around $1,708 will come into action further south and be the last line of defence for the price of gold.
