- The gold price fails to capitalize on its modest intraday rally and remains near one-month lows.
- Expectations that the Federal Reserve will maintain its hawkish stance appear to limit XAU/USD.
- The weakness of the dollar offers some support pending the speech of the president of the Fed, Jerome Powell.
the price of gold It rose for the second day in a row on Tuesday, though it appears to be struggling to capitalize on modest intraday gains. The XAU/USD pair is trading around the $1,872-$1,873 zone in the North American session and remains close to the one-month lows reached on Monday.
Weak demand for US dollars supports the price of gold
The US dollar (USD) halts its recent strong rally move from a nine-month low and turns out to be a key factor lending some support to the gold price. However, expectations that the Federal Reserve (Fed ) hold their aggressive line stance for longer appear to cushion the dollar’s decline. This, in turn, limits any significant rise in the US dollar-denominated commodity.
Tight Fed expectations limit gold price rises
The latest monthly US employment data, released last Friday, points to underlying strength in the labor market and could allow the Fed to continue raising interest rates. This, in turn, pushes up US Treasury yields and acts as a tailwind for the dollar, capping gains for the no-yield gold price, at least for now.
Attention remains focused on Fed Chairman Powell’s speech
Traders also seem reluctant to make aggressive bets ahead of Fed Chairman Jerome Powell’s appearance during the US session. Powell’s comments on inflation and monetary policy could influence market expectations of the Fed’s rate hike path. This, in turn, will play a key role in short-term USD price dynamics. term and will provide a further directional boost to the gold price.
Meanwhile, it seems more likely that XAU/USD will continue to consolidate its sideways trend, in the absence of relevant US economic releases to affect the market. Therefore, it will be prudent to wait for strong follow-through buying before confirming that the recent pullback from the highest since April 2022 has run its course and positioning for further gains.
Gold Price Technical Outlook
From a technical point of view, the lack of significant buying suggests that the recent decline in the price of gold may still be far from over. Also, on the daily chart, the oscillators have just entered negative territory and are still far from the oversold zone. This, in turn, supports the prospects for further depreciation in the near term. That being said, it would be prudent to wait for selling below the multi-week low of around $1,860 before making further bearish bets.
The price of gold could then accelerate the fall towards the horizontal support of $1,825, on the way to the signal of $1,800. Below is the all-important 200-day SMA, currently hovering around the $1,776-$1,775 area. The latter should act as a key point, which if broken decisively will be seen as a new trigger for bears, setting the stage for a deeper corrective fall.
On the other hand, any significant rally will face some resistance near the $1,890-1,892 zone, ahead of the $1,900 signal. If the rally holds, Gold could reach the $1,920 horizontal barrier, above which a short move could send XAU/USD towards the $1,950 area. This is closely followed by the multi-month high around the $1,960 area touched last week.
Key levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
