- Gold price edges lower for the third successive day, albeit manages to hold above a two-week low.
- The USD is seen consolidating its recovery gains from a multi-week low and weighing on the metal.
- The downside seems cushioned in the wake of the uncertainty over the Fed’s future rate-hike path.
- Traders now await Fed Chair Jerome Powell’s scheduled speech before placing fresh directional bets.
Gold price (XAU/USD) remains depressed for the third successive day on Wednesday and trades around the $1,985 area, down just over 0.15% for the day heading into the European session. The precious metal, however, manages to hold above a two-week low, around the $1,957-1,956 region touched on Tuesday as traders await more clarity on the Federal Reserve’s (Fed) rate-hike path before placing fresh directional bets.
A slew of Fed officials this week acknowledged the US economic resilience and signalled that additional interest rate hikes may be needed to bring inflation down further. Hence, the focus will remain glued to Fed Chair Jerome Powell’s speech due later during the North American session. The speech will play a key role in influencing the non-yielding Gold price and help in determining the near-term trajectory.
Ahead of the key event risk, the US Dollar (USD) manages to preserve its recovery gains from its lowest level since September 20 touched on Monday and is seen exerting some pressure on the Gold price. That said, a generally softer tone around the equity markets, along with growing concerns about the worsening economic conditions in China, could act as a tailwind and limit losses for the safe-haven XAU/USD.
Daily Digest Market Movers: Gold price drifts lower for the third straight day amid modest US Dollar strength
- The US Dollar stands tall near the weekly top and exerts some pressure on the Gold price, though the downside seems limited amid the uncertainty over the Federal Reserve’s next policy move.
- The US central bank last week noted that financial conditions may be tight enough already to control inflation. Investors took this as a sign that the Fed was done with its policy-tightening campaign.
- Furthermore, the softer US employment details released on Friday pointed to easing labour market conditions and reaffirmed expectations that the Fed will not hike interest rates any further.
- Comments by several Fed officials this week, however, fuelled uncertainty on whether rates had reached their peak or there is a need to hike interest further to bring inflation back to the 2% target.
- Minneapolis Fed President Neel Kashkari said on Tuesday that the labor market continues to be quite robust and with economic activity running this hot, the central bank’s job is not yet done.
- Fed Governor Michelle Bowman repeated her view that the US central bank will likely need to raise short-term interest rates again to bring inflation down to the 2% target in a timely way.
- Chicago Fed President Austan Goolsbee stressed that any change in the rate stance will primarily be influenced by progress on the inflation rate, though he refrained from speculating on future rates.
- The market attention now shifts to Fed Chair Jerome Powell’s speech, which will be scrutinized for cues about the next policy move and provide a fresh directional impetus to the XAU/USD.
Technical Analysis: Gold price could decline further once the $1,956-1,954 support is broken
From a technical perspective, the overnight swing low, around the $1,957-1,956 area, now seems to protect the immediate downside. A convincing break below the area might expose the 200-day Simple Moving Average (SMA) support, currently pegged near the $1,934 area, before the Gold price eventually drops to the $1,926-1,923 confluence, comprising the 100- and 50-day SMAs.
On the flip side, any meaningful recovery attempt now seems to confront stiff resistance near the $1,980 area. This is followed by the $1,992 hurdle ahead of the $2,000 psychological mark and the post-NFP swing high, around the $2,004 area. Bulls are likely to wait for some follow-through buying beyond the $2,009 region, or a multi-month high touched in October, before placing fresh bets.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.39% | 0.76% | 0.80% | 1.21% | 0.69% | 0.99% | 0.17% | |
| EUR | -0.40% | 0.38% | 0.41% | 0.82% | 0.29% | 0.59% | -0.23% | |
| GBP | -0.77% | -0.38% | 0.03% | 0.43% | -0.09% | 0.21% | -0.62% | |
| CAD | -0.80% | -0.41% | -0.03% | 0.41% | -0.12% | 0.18% | -0.64% | |
| AUD | -1.23% | -0.83% | -0.45% | -0.42% | -0.53% | -0.23% | -1.06% | |
| JPY | -0.70% | -0.31% | -0.15% | 0.14% | 0.51% | 0.29% | -0.52% | |
| NZD | -1.00% | -0.60% | -0.22% | -0.19% | 0.23% | -0.30% | -0.82% | |
| CHF | -0.17% | 0.23% | 0.60% | 0.63% | 1.04% | 0.52% | 0.82% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
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