- Gold price keeps falling as the DXY rises with yields amid hawkish Fed.
- Focus shifts to the US ISM Services PMI and Friday’s NFP release.
- A break below 100-DMA will drive gold towards $1,785 levels.
Gold price is losing another $20 in Thursday’s trading so far, heavily sold-off into the rally in the US Treasury yields across the curve. The benchmark 10-year yields sit above the key 1.70% mark
The FOMC minutes on Wednesday delivered a hawkish surprise after it showed that the Fed policymakers discussed the beginning of a reduction in the overall asset holdings this year. The Fed minutes also revealed that the officials are prepared for earlier and faster rate hikes to combat elevated inflation.
The hawkish Fed outlook boosted the yields, in turn, lifting the demand for the US dollar across the board. The greenback also remains underpinned by the risk-off market profile, as investors fret about aggressive Fed’s tightening expectations and the coronavirus contagion.
It’s a win-win situation for the US dollar, which is likely to weigh on the USD-sensitive gold price. Bears could likely retain control ahead of the critical US economic releases, with the ISM Services PMI due for release on Thursday while Friday sees the Nonfarm Payroll report. Also, of note remains the speech from the St. Louis Fed President James Bullard for fresh cues on the central bank’s policy normalization plans.
Gold Price Chart - Technical outlook
Gold: Daily chart
Gold’s daily chart shows that the latest leg down has taken out all the major Daily Moving Averages (DMA) support levels, as bears now attack the 100-DMA at $1,793.
A sharp sell-off is expected on a firm break below the latter, opening floors for a test of the December 29 low of $1,789.
The next downside target is seen at the December 21 low of $1,785. That will emerge as a powerful support for gold bulls.
The 14-day Relative Strength Index (RSI) has pierced the midline for the downside, pointing to more losses going forward.
Meanwhile, any recovery attempts will face a strong supply at $1,800, where the 21 and 200-DMAs converge.
Further up, bulls will retest the 50-DMA support-turned-resistance at $1,805. Daily highs of $1,812 will guard the additional upside.
Gold: Additional technical levels to consider
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 nears 1.1200 after US PCE inflation data
EUR/USD approaches 1.1200 following generally softer-than-anticipated US inflation-related figures. The pair lacks momentum amid tepid European data undermining demand for the Euro. Still, optimism weighs on the USD.
GBP/USD battles the 1.3400 level for a definitive bullish breakout
GBP/USD advances modestly beyond the 1.3400 level after US PCE inflation data showed price pressures continued to recede in August. Sterling Pound aims for fresh yearly highs beyond the 1.3433 peak posted earlier this week.
Gold hovers around $2,670 as US Dollar resumes decline
Gold price retains its bullish bias near fresh record highs, as demand for the US Dollar remains subdued following US PCE inflation figures. The strong momentum around stocks limits demand for the safe-haven metal.
Week ahead – NFP on tap amid bets of another bold Fed rate cut
Investors see decent chance of another 50bps cut in November. Fed speakers, ISM PMIs and NFP to shape rate cut bets. Eurozone CPI data awaited amid bets for more ECB cuts. China PMIs and BoJ Summary of Opinions also on tap.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.