Gold price (XAU/USD) is seeing a corrective dip following a meteoric rise to $1,857.64 in the early Asian session. After hitting a low of $1,815.66 on Thursday as yields dropped, the precious metal demonstrated a vertical upward rise. Notably, the risk-aversion theme has supported gold prices and other currencies, although the US dollar index (DXY) and global stocks are experiencing volatility.
As a result of investors’ skepticism that the Federal Reserve (Fed) would prevent the onset of a recession, the attraction of the U.S. dollar (DXY) has diminished, and forecasts of lower earnings owing to recession worries have triggered a severe sell-off in global shares.
Yields on 10-year US Treasuries have fallen by 3.32 percentage points to roughly 3.19 percent, and the current market action warrants more losses. Vulnerable yields will further hurt the DXY. After falling below Thursday’s low of 103.42, the DXY is projected to extend its two-day losing trend and balance below 104.00.
In today’s session, Jerome Powell’s speech will remain the most important event. Investors will understand the Fed’s theory behind a 75 basis point (bps) rate rise announcement. In addition, the direction for monetary policy in July will be of great relevance.
Technical Analysis of Gold
On an hourly scale, gold prices are encountering resistance at $1,857.73, which represents a key level of opposition. Typically, a sharp upswing is followed by a small downturn. The precious metal is anticipated to have a slight adjustment towards the Exponential Moving Average (EMA) of 21 periods, which is located around $1,842.35 In the meantime, the Relative Strength Index (RSI) (14) has moved into a bullish range of 60.00-80.00, supporting bullish momentum. A slight decline might push the RSI (14) below 60.00, but positive momentum will persist.