- Gold price has regained its upside momentum after snapping a three-day uptrend the previous day.
- Hopes of China’s strong economic rebound, US-China trade deal, and mixed Federal Reserve talks seem to favor XAU/USD run-up.
- United States Treasury bond yields ease from a multi-month high as Fed policy pivot talks regain market attention.
- US ISM Services PMI for February will be crucial to watch for intraday directions ahead of the key week comprising Fed Chair Powell’s Testimony and US NFP.
Gold price (XAU/USD) has returned to buyers’ radar as the US Dollar traces a pullback in the key United States Treasury bond yields during early Friday. The yellow metal approaches a weekly high, printing 0.18% intraday gains around $1,840 by press time. It’s worth noting that the XAU/USD marked its first daily loss in four days as the US Treasury bond yields propelled the US Dollar amid hawkish Federal Reserve (Fed) talks and challenges to sentiment before the table turned during late Thursday.
After a stellar rally to the multi-month top, the United States Treasury bond yields eased late Thursday and extended the pullback amid early Friday morning, which in turn allowed the Gold buyers to retake control via the softer US Dollar. US 10-year Treasury bond yields rose to a fresh high since early November 2022 on Thursday, piercing the 4.0% threshold, whereas the two-year counterpart rallied to the highest levels since 2007 to 4.94%. However, the bond coupons retreated from their multi-month high as of late.
Fresh chatter of Federal Reserve policy pivot renewed Gold price run-up after Boston Fed President Raphael Bostic said that “the central bank could be in position to pause the current tightening cycle by mid to late summer.” However, Boston Fed President Susan Collins kept supporting the higher rates for longer as she said, “More rate hikes are required to bring inflation back in control.” The latest Reuters poll on the US Dollar also renewed the policy pivot talks and weighed on the US Dollar, as well as propelling the Gold price.
Apart from yields, hopes of China’s economic recovery, the US-China trade deal, and mixed United States data also allowed the Gold price to remain firmer. China’s Caixin Services PMI traced the latest activity data for the dragon nation, printing 55.00 figures for February, versus 50.0 market forecasts and 52.9 previous readings. Elsewhere, the US-China tension at the Group of 20 Nations (G20) meeting probed the Gold price. However, chatter of the likely resumption of the Sino-American trade talks pushed back the risk-off mood afterward and allowed the XAU/USD to recover.
Looking ahead, the US ISM Services PMI for February will be crucial to watch for intraday directions ahead of the key week comprising Fed Chair Powell’s Testimony and the monthly US jobs report for February, encompassing the key Nonfarm Payrolls (NFP). To sum up, the Gold price portrays a bullish consolidation ahead of the aforementioned key fundamental catalysts.
Gold price technical analysis shows that the current trend remains bullish as the XAU/USD pair is trading above the 200-Hour Moving Average (HMA). The upward-sloping support line from Tuesday is adding strength to the XAU/USD upside bias, which is currently around $1,832 by the press time.
The Moving Average Convergence and Divergence (MACD) indicator is also showing a bullish bias, and the recently firmer Relative Strength Index (RSI) line, placed at 14, is keeping buyers hopeful. However, a clear upside break of the fortnight-old resistance line, close to $1,843, is necessary to convince the XAU/USD bulls.
In terms of short-term upside hurdles for the Gold price, the 50% Fibonacci retracement level of the February 09-28 downturn, near $1,848, is acting as a key resistance level. A break above this level could propel the quote towards the tops marked on February 10 and 14, near $1,870.
On the other hand, Gold’s pullback needs to conquer the immediate support line near $1,832, as well as the 200-HMA support surrounding $1,827 to convince sellers. Even if Gold price falls below these levels, a horizontal area comprising multiple levels marked since February 17, close to $1,820-18, could act as an additional check for the XAU/USD bears before directing them to the previous monthly low of around $1,804.
To sum up, Gold price is consolidating in a bullish manner ahead of the aforementioned key fundamental catalysts, and traders should watch for any breakouts above the resistance levels or breakdowns below the support levels for directional cues.
In terms of technical analysis, the gold price is currently above the 200-hour moving average and is adding to its first weekly gain in five. The upward-sloping support line from Tuesday is also adding to the bullish bias. The Moving Average Convergence and Divergence (MACD) indicator is showing a bullish bias along with the recently firmer Relative Strength Index (RSI) line, which is placed at 14, giving buyers hope.
However, the gold price needs to clear the fortnight-old resistance line near $1,843 to convince the bulls, as well as the 50% Fibonacci retracement level of the February 9-28 downturn, close to $1,848. A break of these levels could propel the quote towards the tops marked on February 10 and 14, near $1,870.
On the downside, the immediate support line near $1,832 and the 200-HMA support surrounding $1,827 must be broken for sellers to gain control. However, an area comprising multiple levels marked since February 17, close to $1,820-18, could act as an extra check for the XAU/USD bears before directing them to the previous monthly low of around $1,804.
In summary, the gold price is consolidating bullishly ahead of the key fundamental catalysts mentioned earlier, including the US ISM Services PMI, Federal Reserve Chairman Jerome Powell’s Testimony, and the monthly US jobs report for February.
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