- Gold price is aiming to recapture $1,880.00 as the risk appetite is improving.
- Investors have shrugged-off uncertainty from Powell’s speech and US Biden’s SOTU meeting.
- The Fed might continue keeping rates higher for a longer period as the entire disinflationary process seems complicated.
Gold price (XAU/USD) aims to capture the immediate resistance of $1,880.00 in the Asian session. The precious metal rebounded after dropping to near $1870.00 and is expected to add gains ahead as the risk appetite of the market participants is improving.
Investors have digested the hawkish guidance on interest rates delivered by Federal Reserve (Fed) chair Jerome Powell and US President Joe Biden’s commentary at State of the Union (SOTU).
Fed chair Jerome Powell cleared that the central bank will hike interest rates further if the labor market report continues to surprise the market on the upside. The Fed is committed to raising the inflation rate to 2%; therefore, higher interest rates will continue to stay longer.
Meanwhile, US President Joe Biden sounded tough on China, citing that “The United States is in strongest position from decades to compete with China or anyone else.”
Risk-perceived assets like S&P500 futures have ignored Powell’s hawkish commentary and US Biden’s harsh statement on China. They have recovered losses displayed in the Asian session, portraying a risk-on market mood. The US Dollar Index (DXY) is struggling to firm its feet and is expected to resume its downside journey. Also, the 10-year US Treasury yields have slipped to near 3.65%.
Gold technical analysis
Gold price is forming an Inverted Flag chart pattern on a four-hour scale, indicating a sheer consolidation, followed by a breakdown in the same. Usually, the consolidation phase of the chart pattern serves as an inventory adjustment in which those participants initiate shorts, which prefer to enter an auction after establishing a bearish bias.
The Gold price is also struggling to sustain above the 23.6% Fibonacci retracement (from November 11 low at $1,617.32 to February 2 high at $1,959.20) at $1,878.00.
The 20-period Exponential Moving Average (EMA) at $1,882.20 acts as a significant barricade for the Gold price.
Meanwhile, the Relative Strength Index (RSI) (14) is struggling to cross 40.00, which indicates an absence of strength in the Gold bulls.
Gold four-hour chart
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 holds steady near 0.6250 ahead of RBA Minutes
The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia Minutes released on Monday for some insight into the interest rate outlook.
USD/JPY consolidates around 156.50 area; bullish bias remains
USD/JPY holds steady around the mid-156.00s at the start of a new week and for now, seems to have stalled a modest pullback from the 158.00 neighborhood, or over a five-month top touched on Friday. Doubts over when the BoJ could hike rates again and a positive risk tone undermine the safe-haven JPY.
Gold price bulls seem non-committed around $2,620 amid mixed cues
Gold price struggles to capitalize on last week's goodish bounce from a one-month low and oscillates in a range during the Asian session on Monday. Geopolitical risks and trade war fears support the safe-haven XAU/USD. Meanwhile, the Fed's hawkish shift acts as a tailwind for the elevated US bond yields and a bullish USD, capping the non-yielding yellow metal.
Week ahead: No festive cheer for the markets after hawkish Fed
US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.