XAUUSD set to test $1,750, focus on United States data

  • On the last trading day of the week, the price of gold halted a two-day corrective decline.
  • China renews optimism, stalls US dollar recovery, US Treasury yields shrink.
  • Gold price eyes 50-Simple Moving Average support on 4H chart with bearish RSI.

The price of gold is flat so far this Friday, with bears taking a breather after two straight days of corrective declines from a three-month high of $1,787. Despite trading near the best levels since August, gold is expected to end the week in the red.

The US dollar retreats despite dovish comments from the Federal Reserve

Gold is extending recent losses as the US dollar slips in Asia this Friday. Investors are more optimistic about China’s recovery prospects, especially after Goldman Sachs said on Thursday that China’s gross domestic product (GDP) growth is likely to pick up in 2023. in the second half and 2024, when the economy has weathered the initial negative impact of Covid Zero. strategy in the spring, Bloomberg writes.

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In addition, the US dollar is also bearing the brunt of the USDJPY sell-off after Japan’s consumer price index hit a 40-year high and heightened expectations of a change from the Bank of Japan (BoJ), which suggested the Japanese yen. . The decline in US Treasury yields also cooperated with the US dollar’s turnaround, while supporting the price of gold.

The US dollar rebounded strongly on Thursday along with US Treasury yields following comments from a US Federal Reserve (Fed) policymaker. St. Louis Federal Reserve Bank President James Bullard said the key interest rate may need to be raised to 7% to curb inflation. He added that “to reach a sufficiently restrictive level, the policy rate will have to be increased further”. The benchmark 10-year U.S. Treasury yield bounced from a six-week low near 3.70% and was currently at 3.76%.

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The focus shifts to existing home sales in the United States

A drop in the US producer price index (CPI) and consumer price index (CPI) data from the US raised expectations that the US Federal Reserve will raise interest rates by 50 basis points (bps) in December, another sign of cooling in the US housing market. may contribute to the recent depreciation of the US dollar. Building permits in the United States fell 2.4% to 1,526,000 on Thursday, the lowest since 2020. in June, and the number of housing permits fell 4.2% to 1,425,000.

On Friday, US existing home sales will drop at 3 p.m. GMT, and is expected to fall slightly to 4.38 million in October from 4.71 million previously. If the US data disappoints significantly, it could reinforce expectations that the Federal Reserve will slow down. As a result, the weakening of the US dollar may revive the bullish trend in the price of gold. However, end-of-week flows could change and keep gold bulls on edge, with attention turning to next week’s Federal Reserve meeting minutes.

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Gold Price Technical Outlook: Four Charts

Gold is trading lower, below the horizontal 21 simple moving average (SMA) at $1,771 in the four-hour period.

Downside risk remains intact due to a rising wedge pattern and a fall in the relative strength index (RSI), which is currently at 49.40.

Sellers now need a long-term break below the weekly low of $1,755 to break the psychological barrier of $1,750 when the 50-SMA overlaps. Another downside target is the $1,740 round number.

On the other hand, buyers need to accept the 21-SMA to revive the uptrend. Next, rising wedge support pivoted resistance at $1,794 will appear on their radars.

Source

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