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  • Gold consolidates the previous day’s losses, refreshes intraday high.
  • Trade jitters battle vaccine optimism, upbeat Fedspeak probe buyers.
  • DXY eases amid lacklustre US Treasury yields, cautious sentiment ahead of key US data.
  • Gold Weekly Forecast: XAU/USD could stage a correction before targeting $1,900.

Update: Gold price is trading back and forth in a narrow range around the $1900 mark, holding onto the key support at $1891. Meanwhile, gold bulls seem to lack conviction above $1900, as the US dollar manages to preserve Wednesday’s gains amid a revival of the Fed’s tapering expectations. Firmer US Treasury yields, despite the tepid risk tone, cap gold’s bullish attempts. Technically, the overbought conditions on the daily chart appear  to be playing out, as the focus now shifts towards a flurry of critical US economic releases. US Durable Good and Preliminary GDP will be eyed among other reports.

Read:  Gold Price Forecast: XAU/USD set to retest multi-month highs, bullish potential appears limited

 

Gold (XAU/USD) picks up bids around $1,902, up 0.23% intraday, as European traders brace for the day-start bell. Gold prices jumped to the highest levels since early January the previous day before taking a U-turn from $1,913, mainly due to the US dollar rebound. The follow-on pullback couldn’t last long as the market sentiment dwindles amid mixed clues and push gold traders to wait for more signals.

Disbelief over Fed?

The US Federal Reserve (Fed) officials have a tough time convincing the market plays that the reflation risk is transitory and the central bank isn’t on the way to tapering. The same put a safe-haven bid under the gold prices as US Treasuries, another safe-haven, seesaw of late.

Not only the doubts over Fedspeak but mixed data and challenges to the risk-on mood also helps gold to regain upside momentum. Among the ex-Fed catalysts, the US-China trade tussles and fresh coronavirus (COVID-19) concern in Asia-Pacific, mainly in Australia and Japan, seem to weigh on the sentiment, which in turn back the gold buyers.

Additionally, upcoming US Durable Goods Orders, second reading of US GDP and the Fed’s preferred gauge of inflation, namely the Core Personal Consumption Expenditure (PCE) Price Index, also probe the market’s mood. The scheduled releases are likely to portray further challenges for the US Fed policymakers in battling the reflation woes, which in turn could keep the gold prices positive.

Amid these plays, the US 10-year Treasury yield struggles to extend the previous day’s recovery moves while the US dollar index (DXY) drops 0.03% to 90.02 by the press time. Further, S&P 500 Futures wobble below 4,200, mildly offered recently, whereas Asia-Pacific shares trade mixed.

Given the concerns over Fed’s next action and anticipated challenges from the key US data, gold prices may remain on the front foot. However, buyers need to stay cautious in case of a negative surprise from the data, which in turn could help the US central bank officials to firmly deny reflation risk and boost the greenback, dragging the gold prices down.

Read:  US Durable Goods Orders April Preview:  Jobs should equal spending

Technical analysis

Alike fundamental, technical analysis also portrays hardships for gold’s north-run as it battles immediate horizontal resistance line sluggish MACD and downward sloping Momentum line by the press time.

Even if the quote manages to rise past $1,900, the multi-day high of $1,913 and the upper line of a two-week-old rising wedge bearish chart pattern, near $1,915, will test the gold bulls.

In a case where gold prices rally beyond $1,915, the yearly peak surrounding $1,960 and November 2020 top of $1,966 will gain the market’s attention.

On the contrary, a downside break of the stated wedge’s support line, around $1,889, will confirm the pullback towards the $1,800 threshold.

However, multiple supports near $1,850 and $1,840, not to forget the mid-May low near $1,806, could act as buffers during the south-run.

Gold four-hour chart

Trend: Pullback expected