- Gold price defends corrective bounce off yearly low, sidelined of late.
- Risk-aversion intensified as Russian gas pipeline leak joins pessimism in the UK.
- Firmer US data, hawkish Fedspeak and stronger yields adds strength to the bearish bias for XAU/USD.
- Bullish candlestick can play its role if Fed’s Powell resists praising hawks.
Gold price (XAU/USD) struggles to find acceptance at around $1,630, despite bullish technical signals, as fears of the European energy crisis join firmer yields to propel the US dollar. That said, the cautious mood ahead of a speech from Fed Chairman Jerome Powell also weigh on the metal prices during early Wednesday in Asia.
Multiple leaks in Russia’s gas pipeline in the Baltic Sea raise woes that the Eurozone’s energy supply problems are likely to be permanent. The same intensify fears of recession inside the bloc, especially amid an absence of impressive data and inflation fears. That said, Reuters quoted European Commission Chief Ursula von der Leyen on Tuesday saying, “The leaks of the Nord Stream pipelines were caused by sabotage, and warned of the "strongest possible response" should active European energy infrastructure be attacked.” This adds to the market’s fears of more geopolitical tension between the West and Russia.
On the same line could be the multiple rating agencies, including Moody’s, as well as the international institutions like the International Monetary Fund (IMF), which criticized the UK government’s latest approach.
Furthermore, firmer US Durable Goods Orders and CB Consumer Confidence data joined hawkish Fedspeak to impress the greenback buyers. US Durable Goods Orders declined by 0.2% in August versus the market forecasts of -0.4% and the revised down prior reading of -0.1%. Additionally, US CB Consumer Confidence improved for the second consecutive month to 108.00 for September versus 104.5 expected and 103.20 prior.
"At some point, it will be appropriate to slow the pace of rate increases and hold rates for a while to assess the impact on the economy," Chicago Fed President Charles Evans said on Tuesday, as reported by Reuters. St. Louis Federal Reserve Bank President James Bullard said on Tuesday that they have a serious inflation problem in the US, as reported by Reuters. "More rate rises to come in future meetings." Minneapolis Fed President Neel Kashkari said the central bank is moving "very aggressively," and there is a high risk of "overdoing it."
It’s worth noting that the rally in the global bond yields, led by the UK’s gilt, joined downbeat equities to add strength to the bearish bias for the XAU/USD.
Looking forward, a light calendar could keep the metal pressured amid fears for the bloc, the UK and the market’s rush for risk safety. However, speeches from ECB President Christine Lagarde and Fed Chair Jerome Powell may entertain the pair buyers if they speak about matters relating to the monetary policy.
Technical analysis
Gold price prints mild gains around the two-year low marked the previous day as a bullish candlestick, inverted hammer, joins oversold RSI (14).
The recovery moves, however, need validation from a convergence of the 10-DMA and a two-week-old resistance line, around $1,655, to convince the XAU/USD buyers. Also challenging the metal buyers could be the bearish MACD signals.
Meanwhile, a downside break of the latest bottom surrounding $1,620 will defy the bullish signs and can direct the metal initially towards the $1,600 threshold before directing the bears to the lower line of the broad bearish channel stretched from March, near $1,572 by the press time.
Overall, the gold price may witness a corrective bounce but the trend reversal has a long way to go.
Gold: Daily chart
Trend: Limited upside expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.