Gold on The Rise, US FOMC and Weaker GDP in Play - Forex News by FX Leaders
Gold on The Rise, US FOMC and Weaker GDP in Play

Gold on The Rise, US FOMC and Weaker GDP in Play

Posted Friday, July 29, 2022 by
Skerdian Meta • 2 min read

As buyers and sellers tussle around a three-week high during Friday’s Asian session, the gold price (XAU/USD) struggles to extend its two-day rise. However, the precious metal recently fell below $1,754 as the US dollar tracked yield, reversing the bearish bias ahead of important inflation data. The US Dollar Index (DXY) is defending the 106.00 level while remaining at its lowest since July 2005. The greenback index has fallen for two days as investors’ concerns about the Fed’s aggressiveness have subsided.

On the other hand, a corrective pullback in US Treasury yields after revisiting the multi-day low adds to the mix of growth triggers weighing on GOLD XAU/USD pricing. Nonetheless, US 10-year Treasury rates are hovering around 2.67 percent, the lowest levels since early April, while 2-year bond coupons are hovering near a three-week low, down 0.14 percent intraday around 2.86 percent most recently.

XAU/USD

Following Fed Chair Jerome Powell’s hints of “neutral rates,” gold traders should have followed the Flash readings of US Q2 GDP, which marked the “technical recession” by decreasing for the second time in a row, to celebrate the USD dollar’s weakness and increase higher. Nonetheless, the earliest estimates of US Q2 GDP printed a -0.9 percent annualized number versus a 0.5 percent predicted figure and a -1.6 percent before. Furthermore, initial jobless claims in the United States increased by 253K, compared to 256K during the week ended July 22.

Nonetheless, US leaders, including Fed Chairman Powell and Treasury Secretary Janet Yellen, attempted to dismiss the “technical recession” after US Q2 GDP fell for the second straight quarter and teased the concept. The same questions are being asked of central bankers pushing for higher rate hikes to control inflation. Furthermore, negotiations between US President Joe Biden and his Chinese counterpart Xi Jinping went mainly well, putting downward pressure on safe-haven demand for the greenback.

Gold (XAU/USD) Technical Outlook

Gold price managed to breach and maintain above 1726.60, reactivating the correcting bullish situation and setting the way for new advances that will begin by testing 1755.70.

As a result, a bullish bias will be advised for today, supported by the EMA50, with the understanding that breaking the 1726.60 and 1715.65 levels will end the suggested positive scenario and press on the price to restart the main bearish trend.

Today’s trading range is likely to be between 1725.00 support and 1760.00 resistance.

Today’s projected trend: bullish

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