Gold Downtrend Continues Under $1,810 – XAU/USD Going After $1,799?
Skerdian Meta • 2 min read
Gold (XAU/USD) prices have fallen from their intraday highs, remaining range-bound near $1,813-18, as global markets struggle to find new directions to sustain their previous optimism. As a result, the precious metal GOLD maintains the previous day’s pullback from the 200-DMA during a dull Asian session on Wednesday.
Market sentiment is dwindling as the recent Fedspeak appears more hawkish than previous ones, while headlines about the EU’s oil embargo on Russian imports, as well as China’s Covid conditions, put optimists to the test. Nonetheless, stronger growth numbers from Japan and the Eurozone, upbeat Retail Sales from the US, and the UK’s strong jobs report keep traders optimistic.
Evans, the Fed’s policymaker, appears to have weighed on the market’s mood by renewing fears of a faster rate hike, saying, “(the Fed) Should raise rates to 2.25 percent -2.5 percent neutral range ‘expeditiously.'” Fed Chair Jerome Powell and a generally hawkish St Louis Fed President James Bullard pushed for a 50 basis point rate hike on Tuesday, weighing on the USD.
Data That Can Influence Gold Prices
In terms of data, preliminary Eurozone GDP for Q1 2022 increased past 5.0 percent YoY to 5.1 percent, while also exceeding 0.2 percent QoQ expectations to 0.3 percent. In contrast, US Retail Sales increased at a 0.9 percent MoM rate in April, slightly faster than the expected 0.7 percent rate but slower than the upwardly revised 1.4 percent growth rate (from 0.5 percent ). Japan’s preliminary Q1 2022 GDP readings recently surpassed -0.4 percent expectations to -0.2 percent QoQ, while Annualized GDP improved to -1.0 percent versus -1.8 percent forecasted.
On a different note, the Financial Times (FT) reports that China is diverting anti-poverty funds to Covid testing as the crisis worsens. This is adding to the chatter about the European Commission’s (EC) plan to shift away from Russian energy imports, which is weighing on the market’s mood.
Against this backdrop, US 10-year Treasury yields rose 0.5 basis point (bps) to 2.988 percent, while S&P 500 Futures struggle for direction despite Wall Street’s strong gains.
However, gold traders may see further declines if the US Dollar Index, which is currently unchanged near 103.35, benefits from the latest cautious optimism. In doing so, the dollar gauge may take cues from second-tier housing data as well as qualitative factors such as coronavirus and geopolitics.
Gold Technical Outlook
Gold price has been fluctuating within a narrow band since the morning, remaining stable below the bearish channel’s resistance, while stochastic displays clear overbought signals, awaiting the continuation of the bearish wave, which targets the 1780.25 level as the next main station, reminding you that the continuation of the bearish wave is dependent on price stability below the 1838.00 and 1850.00 levels.
Today’s trading range is expected to be between 1800 support and 1838 resistance.
Today’s expected trend: Overall bearish