Gold looks to Powell for a confirmation
Gold is above quite strong converged support area; XAU/USD is now attempting to break a crucial resistance which could expose the upside toward 1876 and what are the key levels to watch?
Precious metals appear to be holding their last week’s gains on easing US Treasury yields following Atlanta Federal Reserve President Raphael Bostic’s “slow and steady” remarks on Friday. For an extension of the rebound, gold is probably looking for an additional catalyst.
Fed Chair Powell is due to deliver his semi-annual testimony to lawmakers on Tuesday and Wednesday. His remarks will be closely watched as financial markets look to reaffirm the recent repricing higher of Fed rate expectations. In his previous appearance a month ago, Powell emphasized the ‘disinflation’ theme and stopped short of adopting an aggressive tone following a blistering US jobs report.
A similar undertone could boost XAU/USD. US rate futures are pricing in the Fed’s target rate to peak around 5.44% in September from the current 4.50-4.75%, compared with under 5% at the end of January.
XAU/USD 240-minute chart
Meanwhile, US payroll growth, due Friday, grew 215000 in February, slower from 443000 in January, while unemployment is expected to hold near the five-decade low of 3.5%. US data has been broadly better than expected since the start of the month, as reflected in the Economic Surprise Index which is around its highest level since April.
Technical analysis
On technical charts, gold is showing tentative signs of setting up an interim low.
The yellow metal has held a fairly strong converged support area of 1775-1810: the August high of 1807, the lower edge of the Ichimoku cloud support, the 200-day moving average, and the resistance-turned-support on the 89-day moving average (see the daily chart).
Zooming on to shorter timeframes, gold is attempting to break above a vital ceiling on a horizontal trendline from late February at about 1847. Such a break could pave the way toward the 200-period moving average on the 240-minute chart (now at about 1876).
However, for the month-long downward pressure to reverse, XAU/USD would need to break above the February 9 high of 1891.
XAU/USD daily chart
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
