- The price of gold broke a three-day downtrend to bounce off a 13-day low.
- XAU/USD is technically bullish, facing strong resistance around $1,960.
the price of gold resumed its advance after the US Federal Reserve’s monetary policy decision, as XAU/USD trades at time of writing at $1,940 a troy ounce, up from Wednesday’s low of 1,895, 00$. The Fed surprised market participants with a hawkish stance, calming concerns over inflation.
After an initial jump, government bond yields turned south, extending their decline on Thursday and weighing on the US dollar. The 10-year Treasury yield, which peaked at 2.24% after the Fed, currently trades at 2.13%.
Talks over a diplomatic compromise between Russia and Ukraine initially set off the risk-taking mood during the US session on Wednesday ahead of news suggesting an impasse over kyiv’s proposed neutrality. In addition, the International Court of Justice in The Hague ordered Russia to suspend the invasion of Ukraine, which in turn may raise barriers to the success of the talks. Recently, Ukrainian President Volodymyr Zelenskyy hoped for help from allies in air traffic control of Russian military aircraft.
Elsewhere, a softer daily COVID-19 tally from China eases the nation’s virus woes and adds to optimistic sentiment. Along the same lines were headlines suggesting the government’s readiness to boost economic growth, by Chinese Vice Premier Liu He.
However, it should be noted that the 0.25% rate hike from the US Federal Reserve (Fed) and expectations of seven more rate hikes during 2022, along with the upwardly revised inflation forecast, defy risk appetite. Going forward, gold traders will pay closer attention to Chinese and Ukrainian headlines for new directions.
XAUUSD Technical Outlook
XAU/USD rose for the second day in a row, recovering from around the 61.8% retracement of its 2022 rally from $1,780.15 to $2,070.50. The next Fibonacci resistance level lies around $1,960, and a break above it should hint at renewed bullish strength.
The price of gold is technically bullish based on the technical readings on the daily chart. The 100 and 200 moving averages remain well below the current level with slightly bullish slopes. Technical indicators are recovering after approaching their midlines, gaining bullish momentum, with no signs of exhaustion.
The 4-hour chart shows that the price of gold remains on the previous day’s bounce from the 200 SMA, although below the 100 SMA currently around $1,950.
Additional technical levels
Source: Fx Street
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