XAU/USD sees exhaustion around $1,820 after downward move, DXY skids
- The price of gold is expected to rebound as a retest of Wednesday’s low shows a loss of downward momentum.
- Fed Powell’s hawkish commentary has put gold prices on edge for an extended period.
- The DXY is showing a lackluster performance on the bearish US PMI.
Gold price (XAU/USD) is hoping for a rebound as gold bears signal loss of momentum after testing Wednesday’s low around $1,820.00. The precious metal has been hovering in a tight range of $1,822.67-1,825.47 since the end of the New York session and is now showing signs of an upside breakout of the move within the range.
Federal Reserve (Fed) Chairman Jerome Powell’s comment that the central bank is “unwittingly committed” to bringing price stability to the US economy has kept gold prices on edge. To achieve the target inflation rate, the Fed must raise interest rates quickly. By comparing the current inflation rate with that targeted, the former is at least four times higher than the latter.
Meanwhile, the US Dollar Index (DXY) is expecting bearish movement by posting an underperformance on the front of the Purchasing Managers’ Index (PMI). The manufacturing PMI landed at 52.4 well below the forecast and previous print of 56 and 57 respectively. Additionally, the services PMI slipped sharply to 51.6 from the consensus of 53.5 and the previous print of 53.4.
Gold technical analysis
On a broader note, gold prices are showing upside-down moves in the range of $1,821.72-1,847.95. The 20- and 50-period exponential moving averages (EMAs) at $1,828.30 and $1,831.58 respectively are declining, reinforcing a downside bias. Meanwhile, the Relative Strength Index (RSI) (14) is showing signs of losing momentum on the downside. The momentum oscillator assesses support around 40.00 levels.