Gold price turned negitive as US Dollar decline halts.
The price of gold(XAUUSD) is declining from a fresh nine-month high of $1,943 as early Wednesday bulls succumb to bearish headwinds. The United States Dollar’s (USD) downside been limited by widespread risk aversion, and the US Treasury bond rates are making a sluggish rebound, which is putting pressure on the price of gold. The US S&P 500 futures have down 0.45% so far on Wednesday, reflecting the continued weakness in risk sentiment as investors process Microsoft Corp.’s disappointing sales outlook.
After hours in the US, Microsoft posted a loss after announcing a slowdown in the revenue growth of its Azure cloud computing division.
Investors sell their long positions in gold before important US data is released.
Investors lost confidence as a result and stayed away from riskier investments, which helped limit the decline in the value of the US dollar. at the cost of the price of gold. The weight on the price of gold is being increased by a little increase in US Treasury bond rates after a decline the day before. Prior to the announcement of the preliminary United States Gross Domestic Product (GDP) for the fourth quarter of 2022, scheduled for Thursday, the gold price remains optimistic despite the corrective dip.
If the US growth data indicate that the US economy is performing worse than expected, the US Federal Reserve (Fed) may decide to suspend its cycle of tightening or perhaps consider rate cuts later this year. In light of the dovish Federal Reserve forecast, weaker US GDP figures may be good news for the price of non-interest-bearing gold.
Technical Outlook
According to the short-term technical picture, nothing appears to have fundamentally altered, albeit the price of gold may temporarily suffer as a result of repeatedly failing to break through the $1,940 barrier. For a downward break, gold sellers require a daily close below the bottom border of the rising wedge formation, now around $1,933.
Gold’s price may continue to decline toward Monday’s high of $1,911, below which the $1,900 round figure may be tested, on a rising wedge collapse.
Bulls’ final line of defense is at the $1,897 low set on January 18.
The 14-day Relative Strength Index (RSI) is retreating from overbought area but holding comfortably above the midline, indicating that any pullbacks in the price of gold may provide a favorable buying opportunity. for investors. It’s imperative to accept over the $1,940 barrier in order to continue the climb. Additionally, a daily close above the rising wedge resistance at $1,944 is required to possibly reverse the short-term negative bias.
