- The price of gold is in offer after the declarations of the president of the Fed Powell dovish.
- There could be a consolidation ahead if the bulls fail to break above $1,770.
The price of gold is rising due to a dovish speech by Federal Reserve Chairman Jerome Powell on Wednesday which plunged the US dollar. At the time of writing, the price of gold is up around 0.6% from a low of $1,744.95 to a daily high of $1,764.85.
Earlier in the day, the price of gold pared gains as US bond yields rose ahead of Federal Reserve Chairman Jerome Powell’s expected speech. However, Powell said policy would most likely need to remain tight for some time and that it made sense to moderate the pace of interest rate hikes. He said the time to slow the pace of rate hikes could come as soon as the December meeting.
Consequently, a weaker dollar has kept the price of gold on track for its best month since May 2021. The dollar index, DXY, last fell 0.5% to 106.29, while the US bond yield at 10-year declined to 3.694%, not far from the 7-week low of 3.62% on November 28. The dollar is heading for its biggest monthly loss since September 2010 as investors wait for the Fed to hit a rate ceiling early next year. Markets now see a 75% chance of a minor interest rate hike of 50 basis points in December, after four consecutive 75 basis point hikes.
Cooling of labor data in the US
On the other hand, the data suggests that the labor market has begun to cool: “The number of job openings in the US dipped to 10.3 million in October (10.7 million previously). The number of hirings and the total number of firings barely ranged, standing at 6.0 million and 5.7 million respectively Job openings are down from their peak of nearly 12 million in March, but with 1.7 job openings for every unemployed person in the US, the demand-supply mismatch workload is still large,” ANZ Bank analysts explain.
Meanwhile, analysts at TD Securities argue that a bull trap is setting in the precious metals markets: “Consistent trend-followers have significantly covered their short positions in gold in recent days, while price resilience has likely continued to attract interest from new discretionary money managers looking for a recessionary hedge amid a spike in central bank monetary policy.”
However,” the analysts said, “the narrative is chasing prices, and we see several catalysts on the agenda that could trigger a further leg lower when CTAs run out of supply.” is an obvious candidate for a catalyst, along with the inflation and employment data.”
Gold Technical Analysis
The harmonic pattern on the daily chart is bullish, but there is a lot of resistance for the bulls to overcome. The price could be headed for further consolidation if the bulls cannot break above $1,770 on the 4-hour chart:
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
