Gold Price Forecast: XAU/USD struggles around 200-DMA amid US dollar’s rebound

Gold rallies to a 50% mean reversion level because the US dollar slides.
Markets are looking to the Fed for direction, steering the greenback on Wednesday.
Update: Gold price is posting small losses thus far this Thursday, snapping its two-day rebound, because the bulls face stiff resistance at the 200-Daily Moving Average (DMA) at $1826. the newest pullback in gold price are often attributed to a broad-based US dollar rebound, because the greenback licks its wounds following Fed Chair Jerome Powell-led blow. Powell, in his Congressional testimony on Wednesday, suggested that more US economic progress is required before stimulus are often pared back.

Mixed Chinese GDP and activity numbers signaled that the V-shaped recovery within the world’s second-biggest economy might be plateauing, which offered extra legs to the dollar’s bounce amid increased haven demand. Attention now turns towards a fresh batch folks economic releases, including the Jobless Claims, regional manufacturing indices and Industrial Production, due for release afterward Thursday for fresh trading impetus. Also, round 2 of Powell’s testimony are going to be eyed.

The price of gold is over 1% higher on Wednesday because the bulls cash in of a weaker US dollar. XAU/USD has climbed from a coffee of $1,804.58 to a high of $1,829.88.

The greenback was lower despite the prior day’s huge inflation data beat because the Federal Reserve System Chair Jerome Powell told Congress the US economy was “still a ways off” from levels the financial institution wanted to ascertain before tapering its monetary support.

A day earlier, data showed June US inflation hit its highest in additional than 13 years.

Additionally, in other data, the US producer prices also rose quite expected, posting their largest annual increase in additional than 10-1/2 years.

Meanwhile, the US dollar remains below its three-month high, near 93.50, albeit capped below 92.80 daily resistance.

Moreover, markets are still not convinced that the Fed is wrong which is weighing on the greenback.

Fed Powell, at the start of his two-day testimony to Congress, said the Fed is firm in its belief that current price increases are tied to the economic reopening and are transitory.

”While the Fed’s hawkish tilt may have removed the immediate impetus for speculators to shop for gold, Chinese funds are buying the dip, with physical purchases also supporting the alpha-beta brass even as it flirted with its pandemic-era uptrend support,” analysts at TD Securities argued.

”Meanwhile, gold’s breakout from its recent trading range could also be attracting some interest from technicians. However, we note that mean-reversion indicators have outperformed momentum signals over the past 60 days,” the analysts added.

”Overall, while the benign positioning slate in precious metals continues to make a set-up that ought to eventually function a catalyst for higher prices, this breakout may only be pointing to skewed flows for the nonce .’

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