- Gold price turns red for the first time in a week amid firmer DXY.
- Treasury yields recover post-FOMC minutes, despite risk-off mood.
- Gold eyes more losses amid symmetrical triangle breakdown on the 1H chart.
Gold price closed in the green on Wednesday above $1800 but remained within Tuesday’s trading, as the US dollar’s strength countered the slump in Treasury yields. Heading into the critical June FOMC meeting’s minutes, gold price advanced amid pre-minutes caution and worries over covid contagion, which boosted the safe-haven demand for Treasuries while downing the yields. However, the greenback’s advance amid risk-off mood capped the gains in gold.
Meanwhile, the dollar changed its course on the FOMC minutes and edged lower across the board, although failed to lift the sentiment around gold price. The minutes turned out rather mixed, with the Fed policymakers hinting towards tapering talks in the coming minutes while noting the committee's standard of "substantial further progress" was generally seen as not having yet been met. The not-so hawkish Fed minutes offered some relief to Wall Street indices, keeping a lid on gold’s upside.
In the aftermath of the FOMC minutes, gold is reversing its recent run to three-week tops of $1815, in the red for the first time in a week. The resurgent demand for the US dollar amid risk-averse market conditions, in light of rising coronavirus cases in Asia and the Fed’s tapering expectations, weighs negatively on the USD-denominated gold. Further, a recovery in the US 10-year Treasury yields from five-month lows also collaborates with the downside in the non-yielding gold. Later today, the US Jobless Claims data will be eyed for fresh dollar trades. In the meantime, the dynamics in the yields and the greenback will continue to play out, investors await fresh covid updates and ECB’s decision on its inflation target.
Gold Price Chart - Technical outlook
Gold: Hourly chart
As explained here, gold price failed to deliver a daily closing above the 21-DMA, then at $1804, on Wednesday, which likely recalled the sellers.
On the hourly chart, gold price confirmed a symmetrical triangle breakdown on a sustained breach of the $1800 support.
The bears extend their control, as gold price closes in on the upward-sloping 100-Hourly Moving Average (HMA) at $1794.
If the selling pressure intensifies, a test of the July 6 low at $1790 remains on the cards.
The Relative Strength Index (RSI) is flatlined below 50.00, remaining in favor of the bears.
On the flip side, if gold bulls manage to recapture the key resistance around $1802-$1803 (21, 50 SMAs confluence), then the further upside could open towards the triangle resistance at $1806.
Acceptance above the latter would invalidate the downside breakout of the triangle, calling for a fresh upswing towards $1815.
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
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.