XAU/USD pulls back towards 10 DMA as yields portray market anxiety

  • Gold price compares weekly gains with slight losses as it breaks the two-day uptrend.
  • Global markets remain sidelined amid pre-GDP anxiety and mixed concerns around the Fed.
  • Light calendar off in China adds to market inaction and probes XAU/USD traders.

The price of gold (XAU/USD) records slight losses around $1,930 as it consolidates the gains made in the last six consecutive weeks. That said, the sluggish markets early on Wednesday joined the cautious mood ahead of major US data/events, as well as the technical formation, to tease bears XAU/USD after rising for the last two days in a row.

US Treasury yields portray market inaction as Tuesday’s US activity numbers showed improvement in January, but marked the seventh consecutive contraction in PMIs and kept recession fears on the table.

Elsewhere, aggressive comments from European Central Bank (ECB) officials ahead of next week’s monetary policy contrast with declining market bets on the Fed’s aggressive rate hikes to confuse traders. “Fed funds futures see just two more quarter-point rate hikes by the Fed to peak around 5% in June before starting to cut rates later in the year. The Federal Reserve itself has insisted it still has 75 basis points of increases in progress,” Reuters said.

It is worth noting that strong inflation data from Australia and New Zealand earlier in the day also weighed on the price of gold amid fears of aggressive rate hikes by the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand. Zealand (RBNZ).

Against this backdrop, the S&P 500 Futures print moderate losses, but stocks in the Asia-Pacific region trade mixed and support the zone’s currencies.

Moving forward, gold traders may witness slow moves and may parry recent gains ahead of Thursday’s US data dump, including the monthly durable goods orders, weekly jobless claims and the preliminary GDP readings. of the fourth quarter. Above all, next week’s Federal Open Market Committee (FOMC) meeting is the most important event for XAU/USD traders to watch for clear directions.

Gold price: technical analysis

Gold price makes a turnaround from the one-week ascending resistance line around $1,942 at press time, which in turn takes cues from the overbought RSI and looming bears on the MACD to keep sellers hopeful. .

However, the 10 DMA support level around $1,920 restrains the immediate drop in the price of gold.

If the bright metal remains weak above $1,920, the previous weekly low near $1,896 could act as gold bulls’ last defense.

On the other hand, successful gold trading above the adjacent resistance line near $1,942 high could propel the price towards an ascending trendline from Dec 13, 2022, near $1,962.

It should be noted that the March 2022 peak near $1,966 can act as an extra filter to the north before highlighting the psychological magnet at $2,000.

Gold price: daily chart

Trend: expected pullback

XAU/USD pulls back towards 10 DMA as yields portray market anxiety

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