"Gold Rally Extends to $2,040, Promising Further Upside"
In a notable surge, the price of gold witnessed a significant uptick on Tuesday, showcasing stability at a seven-month high of $2,044, marking a 1.5% increase for the day. This positive momentum was spurred by the Federal Reserve's (Fed) mild comments, elevating investor sentiment and propelling asset prices higher.
The XAU/USD pair continues to face upward pressure and is expected to reach even higher levels in the near future. On the daily chart, technical indicators remain favorably oriented, although the Relative Strength Index (RSI) has entered overbought territory. The precious metal has surpassed the undirected moving averages, with the 20-day Simple Moving Average currently stabilizing around $1,980.
Analyzing the 4-hour chart, technical indicators remain largely positive, albeit at overbought levels. The 20-day Simple Moving Average is accelerating upward, while the 100 and 200 moving averages are also on an upward trajectory, indicating strong buying pressure. The primary price target for XAU/USD is anticipated at $2,074.87, the monthly high from August 2020.
Support levels: $2,048.20, $2,062.90, $2,074.90
Resistance levels: $2,021.40, $2,005.70, $1,991.45
Against this backdrop, gold prices continued to rise on Tuesday, with XAU/USD trading at $2,038.45 after Wall Street opened. The US Dollar remains under selling pressure, primarily due to the dovish comments from Fed Reserve Bank President Christopher Waller.
Waller noted that recent economic slowdown is encouraging, as it may indicate that monetary policy is tight enough to curb inflation. Furthermore, he suggested that if inflation continues to decrease in the coming months, the central bank may consider lowering the policy interest rates.
Previous comments from Fed Chicago President Austan Goolsbee also emphasized positive progress on inflation, noting that "it's decreasing, not at the target yet, but by 2023, we are on track to set the highest inflation reduction rate in 71 years."
However, Fed Governor Michelle Bowman maintained a hawkish stance, cautioning that another interest rate hike could still occur, especially if the inflation process slows down.
The significant departure from the usual hawkish tone of Fed officials has driven bond yields lower. Currently, the 10-year government bond yield stands at 4.36%, while the 2-year bond yield is at 4.80%, both experiencing a decline on the day. This reflects the market's response to the evolving dynamics in the global economic and financial landscape.
The XAU/USD pair continues to face upward pressure and is expected to reach even higher levels in the near future. On the daily chart, technical indicators remain favorably oriented, although the Relative Strength Index (RSI) has entered overbought territory. The precious metal has surpassed the undirected moving averages, with the 20-day Simple Moving Average currently stabilizing around $1,980.
Analyzing the 4-hour chart, technical indicators remain largely positive, albeit at overbought levels. The 20-day Simple Moving Average is accelerating upward, while the 100 and 200 moving averages are also on an upward trajectory, indicating strong buying pressure. The primary price target for XAU/USD is anticipated at $2,074.87, the monthly high from August 2020.
Support levels: $2,048.20, $2,062.90, $2,074.90
Resistance levels: $2,021.40, $2,005.70, $1,991.45
Against this backdrop, gold prices continued to rise on Tuesday, with XAU/USD trading at $2,038.45 after Wall Street opened. The US Dollar remains under selling pressure, primarily due to the dovish comments from Fed Reserve Bank President Christopher Waller.
Waller noted that recent economic slowdown is encouraging, as it may indicate that monetary policy is tight enough to curb inflation. Furthermore, he suggested that if inflation continues to decrease in the coming months, the central bank may consider lowering the policy interest rates.
Previous comments from Fed Chicago President Austan Goolsbee also emphasized positive progress on inflation, noting that "it's decreasing, not at the target yet, but by 2023, we are on track to set the highest inflation reduction rate in 71 years."
However, Fed Governor Michelle Bowman maintained a hawkish stance, cautioning that another interest rate hike could still occur, especially if the inflation process slows down.
The significant departure from the usual hawkish tone of Fed officials has driven bond yields lower. Currently, the 10-year government bond yield stands at 4.36%, while the 2-year bond yield is at 4.80%, both experiencing a decline on the day. This reflects the market's response to the evolving dynamics in the global economic and financial landscape.
