- Gold Price rebounds, as bears bide time before next push lower.
- Risk flows temporarily down the US dollar while recession fears lurk.
- XAUUSD still targets rising channel target at $1,722 despite oversold RSI.
The FOMC June meeting’s minutes published read hawkish and put a fresh bid under the US dollar in American trading on Wednesday. The Fed minutes revealed that the board members remained worried over inflation becoming more entrenched, and therefore, “warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.” Amidst unrelenting buying interest around the dollar, Gold Price was smashed to a nine-month low of $1,732. The greenback was already a preferred safe-haven asset, as recession fears amplified but the hawkish Fed minutes bolstered its demand. The impressive rebound in the US Treasury yields also exacerbated the pain in the bright metal, as the minor upturn in Wall Street indices failed to impress XAU bulls. In the aftermath of the Fed minutes, the CME FedWatch Tool showed that markets price in a 94% chance of a 75 bps rate hike in July vs. 84% expected on July 5.
Gold Price is attempting a minor recovery towards $1,750, as the improvement in risk sentiment has fuelled a decent pullback in the dollar across its main peers. The recent strength in the US rates warrants caution for bulls, as they firm up ahead of Friday's labor market report. Risk flows returned, as markets stabilize after two days of intense volatility amid rife recession fears, surging gas prices and political instability in the UK. Investors reassess recession risks amid signs of peak inflation ahead of the critical US employment data. The US ADP jobs data is suspended to be released all through the Summer, as the company implements a new methodology. Hence, speeches from Fed and BOE officials will be closely followed.
Gold Price Chart: Daily
On the daily chart, gold price remains on track to challenge the rising channel target aligned at $1,722, as the latest bounce is only seen as temporary.
The renewed upside in the metal could be attributed to the oversold conditions on the 14-day Relative Strength Index (RSI), which is currently at 28.40.
The ongoing road to recovery could be immediately capped by the $1,750 psychological level, above which a fresh upswing towards the powerful hurdle around $1,775 cannot be ruled. That level is the confluence of the January 28 low and the previous day’s high.
If sellers regain control, then the $1,700 mark will be at risk on a sustained move below the abovementioned crucial support at $1,722.
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
AUD/USD: Bears still dominate the sentiment
AUD/USD quickly reversed Monday’s auspicious start to the week on Tuesday, shifting its attention to the downside and printing new multi-week lows near 0.6430 ahead of the release of inflation data in Oz.
EUR/USD: Sellers will not leave it alone
EUR/USD resumed its widespread leg lower on Tuesday, rapidly setting aside Monday’s bullish price action and returning to the area below the 1.0500 support prior to key US data releases on Wednesday.
Gold under pressure below $2,630
Gold fluctuates above $2,600 on Tuesday after sliding almost three percent – a whopping $90 plus – on Monday due to rumors Israel and Hezbollah were on the verge of agreeing on a ceasefire. Whilst good news for Lebanon, this was not good news for Gold as it improved the outlook for geopolitical risk.
Bitcoin needs a further correction for sustained growth
After weeks of rapid growth, Bitcoin (BTC-USD) entered the maximum turbulence zone falling below $94,000. BTC is currently trading at $93,764 and continues to trend downward, having exited the ascending channel.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.