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Mar 20
2024

Gold: Will Powell help XAU/USD confirm a Bull Flag confirmation?

Gold price is replicating the move seen during Tuesday’s Asian trading early Wednesday, as buyers hold their breath after the previous late rebound. The US Dollar is consolidating the ongoing uptrend even as the US Treasury bond yields see a modest retreat from multi-day highs.

Technical Overview

The short-term technical outlook for Gold price remains more or less the same, with a Bull Flag confirmation awaited on a daily candlestick closing above the falling trendline resistance at $2,165.

Acceptance above the latter will trigger a fresh upswing toward the $2,190 level, above which the record high at $2,195 will be retested. The next relevant bullish targets are seen at the $2,200 threshold and the $2,250 psychological level.

The 14-day Relative Strength Index (RSI) is sitting just beneath the overbought region, near 68.00, suggesting that a fresh Gold price upswing could be in the offing.

If Gold sellers fight back control, immediate support is seen at Monday’s low of $2,146, below which the falling trendline support at $2,132 will come to buyers’ rescue.  

A sustained move below that level will put the March 6 low of $2,125 to the test. Further down, the key round level of $2,110 will challenge bullish commitments.

 

Fundamental Overview

It’s a calm before the US Federal Reserve (Fed) interest rate decision storm, as Gold traders turn on the sidelines, refraining from placing any fresh positional bets on the bright metal. Markets are turning caution, as tensions mount in the run-up to the Fed showdown, with markets eagerly awaiting fresh hints on the timing and scope of the Fed’s first interest cut this year.

Markets are currently pricing in just about 60% of a June Fed rate cut. While the December Fed’s Dot Plot chart projects three rate cuts, it remains to be seen what the central bank’s outlook on interest rate cuts offers. Also, of note, will be Fed Chair Jerome Powell’s comments at the post-policy meeting press conference for fresh impact on the value of the US Dollar and the non-interest-bearing Gold price.

On Tuesday, Gold price snapped its early rebound and fell as low as $2,148 before recovering losses to settle near $2,158. The downtick in the Gold price was sponsored by a renewed US Dollar buying interest.

The USD/JPY pair rallied hard, following the expected interest rate hike by the Bank of Japan (BoJ), driving the US Dollar higher while weighing on the US Dollar. However, some modest weakness in the US Treasury bond yields and a risk-on rally on Wall Street indices capped the US Dollar upside, allowing Gold price to stage a decent comeback.

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