- Gold price bulls take a breather just below $1,950 after the ongoing upsurge.
- United States Gross Domestic Product data to affect risk trends, US Dollar trades.
- Gold price eyes critical US events for the next move. Buyers could retain control.
Gold price is treading water near the highest level in nine months at $1,949 in Thursday’s trading so far, having witnessed good two-way businesses amid heightened volatility on Wednesday. The United States Dollar (USD) is licking its wounds alongside the US Treasury bond yields heading into the critical US Preliminary Gross Domestic Product (GDP) for the fourth quarter.
All eyes on the United States Q4 Gross Domestic Product
The US Dollar seems to have paused its run of losses, as investors resort to repositioning ahead of the high-impact United States Gross Domestic Product first estimate, which is due for release at 13:30 GMT. The annualized US Q4 Gross Domestic Product is foreseen at 2.6% vs. 3.2% previous while the Gross Domestic Product Price Index is seen easing to 3.3%. The United States Durable Goods Orders, weekly Jobless Claims and Core Personal Consumption Expenditures will be reported parallelly but the American growth numbers will likely stand out amid looming risks of a potential US recession.
The recent series of downbeat United States economic data, including the Retail Sales, Industrial Production and Manufacturing PMI, has revived concerns over the health of the US economy, boosting expectations of smaller rate hikes from the US Federal Reserve in the upcoming policy meetings.
Risk sentiment holds the key to Gold price
The United States Gross Domestic Product data is likely to have a significant impact on risk sentiment, which will eventually influence the US Dollar valuations. Investors will likely re-price Federal Reserve policy expectations, in the face of the US economic outlook in the year ahead. At the time of writing, the US S&P 500 futures are marginally higher on the day, buoyed by Tesla Inc. earnings report. The United States electric vehicle (EV) giant reported fourth-quarter profits of $3.7 billion, up 59% from the year-ago period as revenues jumped 37% to $24.3 billion.
Gold price technical analysis: Daily chart
Having tested the upper boundary of a rising wedge pattern on multiple instances this week, Gold price finally broke above the latter on a daily closing basis on Wednesday. That upside hurdle is now aligned at $1,945.
The natural tendency of the rising wedge is usually to yield a downside break. Therefore, Gold buyers remain skeptical, especially awaiting the first estimate of the United States Gross Domestic Product (GDP) release.
Should the key US economic data disappoint, implying signs of slowing down in the American economy, the US Dollar could stage a solid recovery across the board. As a result, Gold price could extend its corrective downside to test the wedge support at $1,937.
Further south, Gold sellers are expected to challenge the previous day’s low at $1,920, below which a test of the $1,900 mark will be inevitable.
Gold sellers, however, need a daily closing below the lower boundary of the rising wedge formation, now at $1,933, to confirm a downside break.
The 14-day Relative Strength Index (RSI) is back in the overbought territory, which could provide extra legs to the Gold price correction.
However, if the United States' growth figures dismiss recession fears, which could fuel a risk rally on global markets and down the demand for the safe-haven US Dollar. In such a scenario, Gold price could see a fresh rally above the $1,950 psychological level.
The next upside target for Gold bulls is envisioned around April 20 2022 highs near $1,958. A sustained move above the latter will bring the last April high of $1,998 back into the picture.
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.