Gold holds the 200-DMA breakout and remains firmer around the monthly top.
Bulls appear to gain from uncertainty about the Fed’s next steps, despite Powell’s continued denial of the necessity for policy changes.
Fresh Sino-American tensions, as well as covid troubles, add to the market’s pessimism.
Consumer-centric data from the United States is awaited, and qualitative drivers are crucial.
During Friday’s Asian session, gold (XAU/USD) prices continued their four-day gaining streak, hitting a monthly high of $1,830, up 0.05 percent intraday.
The recent rally in gold certainly took cues from the risk-off mentality, as it broke through the crucial 200-day moving average the day before, paving the way for a move higher to another significant technical resistance level. However, thanks to the greenback’s safe-haven appeal, the US Dollar Index (DXY) remains firm, limiting investment flows to gold.
The DXY, on the other hand, recovered 0.21 percent on Thursday, after suffering its worst losses in over a week the day before. The dollar index is struggling to find a distinct direction while moving upward, owing to uncertainty about the Federal Reserve’s next steps and contradictory data.
During his second round bi-annual testimony the day before, US Fed Chair Jerome Powell underlined that policy tweaks are not urgent, but St. Louis President James Bullard disagreed. In addition, mixed manufacturing data from Philadelphia and New York, combined with lower-than-expected Jobless Claims, have an inflation component, justifying the Fed’s refusal to act.
The rising coronavirus concerns in the West, as well as Asia-Pacific nations, may also be dragging on sentiment, having recently heightened the negative risk to the pandemic’s economic recovery. Furthermore, the market’s risk-off mood is exacerbated by new anxieties between the US and China, as a result of the predicted new sanctions on Beijing and the dragon nation’s refusal of the Sino-American diplomats conference.
The S&P 500 Futures are down 0.23 percent, while US 10-year Treasury rates are hovering around 1.30 percent following two days of losses.
The early readings of the Michigan Consumer Sentiment Index, predicted to be 0.4 percent for June and 86.5 for July, will be vital to observe as the sluggish markets continue to challenge gold buyers. Risk catalysts like as updates and US-China news, not to mention Fedspeak, will be on the top of the list to watch for new impulse.
Gold’s prolonged upside break of the 200-day moving average, bolstered by firmer MACD signals, as well as effective trading beyond the 100-day moving average and a 13-day-old support line, keep buyers optimistic.
However, the metal’s potential ascent will be tested by a horizontal range surrounding $1,845 that includes the top of early May and the lows of mid-June.
The June 02 lows of $1,855 and $1,880 will also test the upward trend, before exposing the $1,900 barrier that holds the key to June’s peak of $1,916.
To test the short-term rising trend line support of about $1,809, pullback swings must close below the 200-DMA level of $1,826. Bears, on the other hand, are less inclined to incur the risk of entering the market unless gold prices remain above the 100-day moving average of $1,791.
Expect more gains in the future./n
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