Gold Intraday Outlook: Stronger dollar drags gold to one year
Arslan Butt • 1 min read
Gold prices continue to trade lower, to hover near a one-year low, as the Greenback recovered following Federal Reserve Chairman Jerome Powell’s remarks. Fed Chair bolstered views that the central bank is on track to steadily raise interest rates.
Gold -XAU/USD – Fundamental Outlook
The Federal Reserve, the U.S. central banker said that it should ease away from monetary policy accommodation and move interest rates up far enough to avoid undesired inflation. That’s exactly what Fed Chair Powell is looking to do. The odds of September and December rate hike are at a peak now.
Why interest rate impacts gold prices?
The higher interest rates tend to support the dollar and shove up bond yields, causing Greenback-denominated gold to become more costly for holders of other currencies and denting its appeal. That’s the major reason behind recent sell-off in gold.
Gold -XAU/USD – Technical Outlook
On the two hour chart, gold has come out of the descending triangle pattern. That’s the same pattern we spotted on Tuesday. For now, the fundamentally bearish gold is likely to continue selling trend until the next support level of $1,221 and $1,212.
On the upper side, the support level of $1,237 will work as a resistance now. The moving averages are also supporting the bearish bias of investors.
Gold – XAU/USD – Trade Idea
I will be looking to take sell position below $1,226 for a long-term target of $1,212. Good luck!