- Gold pulls back from two-day highs and approaches weekly lows again.
- The US dollar rises across the board after Portugal’s comments.
gold prices fell sharply during the American session, erasing daily gains. The XAU/USD reached a high of $1,833, the highest level in two days, and then turned lower, falling to $1,814, slightly above the daily low of $1,811.
The pullback came amid a rally in the US dollar. DXY jumped towards 105.00, the highest level in a week. Rises for the second day in a row as market concerns remain.
US yields edged lower on Wednesday even as central bankers sounded hawkish from Portugal, where the European Central Bank is holding its annual meeting. The president of the Fed, Powell, warned of the risk that the rise in interest rates poses for the economy; however, he made it clear that the biggest risk is losing price stability. ECB President Lagarde said she will consider the “anti-fragmentation” tool at the July meeting.
Short term outlook
The bounce from $1,811 weakened before reaching $1,835, a short-term downtrend line. A break above the mentioned level should open the doors for more gains, targeting $1,845 initially and then levels above $1,850.
While below $1,835 the picture is tilted to the downside, with increasing risks of more losses below the 20 SMA on the 4 hour charts (currently $1,825).
XAU/USD is testing $1,815 and below that attention would turn to $1,811 (29 Jun low) and then $1,804 (14 Jun low), the last defense of $1,800.
Technical levels
Source: Fx Street
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