Why Gold Can Remain Bearish Below $1,836: Quick Technical Outlook
The gold price is still hovering around $1,835 as bulls take a breather after the Fed-inspired rally, the largest in four weeks. Nonetheless
The gold price is still hovering around $1,835 as bulls take a breather after the Fed-inspired rally, the largest in four weeks. Nonetheless, low US Treasury yields and a bullish chart pattern keep metal buyers optimistic. However, US 10-year Treasury yields extended their post-Fed losses, falling seven basis points (bps) to 3.33 percent by press time, weighing on the US dollar, and allowing XAU/USD bulls to remain optimistic.
Although, a lack of significant data/events appears to have limited the immediate upside for GOLD. For instance, the S&P 500 Futures track Wall Street’s gains, with a 0.82 percent intraday run-up at the most recent close.
To combat inflation fears, the US Federal Reserve (Fed) announced Wednesday the largest interest rate hike since 1994. The US Federal Reserve also raised its inflation forecasts for this year while lowering its inflation expectations. Furthermore, policymakers indicated that the next meeting would see a rate hike of 50 or 75 basis points. However, the Fed’s rejection of the odds of a 100 basis point rate increase and Chairman Jerome Powell’s measured remarks appear to have drowned Treasury yields and the US dollar in the aftermath.
It’s worth noting that the US data also tested the bulls of the US dollar ahead of the Fed. For instance, US Retail Sales fell 0.3 percent month on month, compared to an expected 0.2 percent increase, and previous readings were revised downward by 0.7 percent. In addition, the NY Empire State Manufacturing Index fell to -1.2 from 3.0 expected by the market and -11.6 previously.
Gold Technical Outlook
Gold price struggles to confirm breaking the 1810.00 level and continues to fluctuate around it, waiting for a negative catalyst to push the price above the mentioned level and open the way to our next expected target of 1780.25.
In general, we will continue to recommend a bearish trend for the foreseeable future unless the price rallies to breach 1838.10, followed by 1850.00, and remains above them. Today’s trading range is expected to be between 1790.00 support and 1830.00 resistance. Good luck!
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