Gold Price is correcting to the upside and breaking into the $1,900s in Asia as the US dollar is faded. The aggressive gestures from Fed policymakers have already prepared investors for a jumbo rate hike.
On Tuesday, US Consumer Confidence and Durable Goods Orders will remain in focus.
Gold Price is rising in Tokyo as the US dollar loses some of its momentum following a sharp advance at the start of the week. The gold price remains, however, near a four-week low that was printed overnight. At $1,900.21, the price is 0.11% higher. Gold has risen from a low of $1,897.42 and touched a high of $1,903.83.
The pessimism in the gold prices is marked by soaring inflation in the US economy. The US Consumer Price Index (CPI) has reached multi-decade highs along with the second booster of the tight labor market has already featured a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed). Well, as per the dictation by Fed chair Jerome Powell in his testimony at the International Monetary Fund (IMF) meeting; a jumbo rate hike is imminent while investors will further focus on the status of balance sheet reduction. Squeezing liquidity from the economy at a faster pace is the need of the hour and Fed policymakers are likely to exploit each measure.
Also read: Gold Price Forecast: XAUUSD beaten down by growth-related fears
Going forward, the precious metal is likely to dance to the tunes of the US Consumer Confidence and Durable Goods Orders release, which are due on Tuesday. A preliminary reading for the monthly Durable Goods Orders is 1% against the prior print of -2.1%.
Gold Technical Analysis
From a technical outlook, the correction is moving in on the hourly 38.2% Fibonacci area near $1,902 and could now be expected to continue lower for the forthcoming session. With that being said, however, there are prospects of a deeper correction, potentially to as far as the 78.6% Fibo. This has a confluence near the prior lows:
On a four-hour scale, XAU/USD is trading near its potential demand zone, which is placed in a narrow range of $1,891.38-1,896.31. A bear cross, represented by the 20- and 200-period Exponential Moving Averages (EMAs) at $1,940.00 adds to the downside filters. Meanwhile, the Relative Strength Index (RSI) (14) has established in a 20.00-40.00 range, which signals the strength of the sellers.
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Gold bulls are moving in, but the force is strong with the bears.Gold Price is rising in Tokyo as the US dollar loses some of its momentum following a sharp advance at the start of the week. The gold price remains, however, near a four-week low that was printed overnight.
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