Gold price dropped during the New York session and was down 0.36% at $1,787.78 at the time of writing. Meanwhile, US 10-year Treasury yields, which plunged in a gloomy US 30-year bond market on Thursday, later rebounded to 1,341, up 4 basis points (bps). The US dollar index (DXY), which tracks the dollar’s performance against six currencies and affects commodity prices, rose 0.05% to 92.57.

Is Jerome Powell getting close to the Fed hawks?

Earlier in the American session, the US dollar index was trading around 92.36. However, rising yields and mixed market sentiment supported demand for the dollar, triggering a drop in the non-yielding metal. Cryptocoin. com, Fed speakers throughout the week referred to the beginning of tapering. On Tuesday, St. Louis Fed James Bullard and New York’s Fed John Williams agreed that the decline in QE will begin later this year. While markets were familiar with James Bullard’s hawkish stance, NY Fed’s John Williams was a bit taken aback, implying that Jerome Powell was leaning towards the same stance.

On Thursday, Fed Raphael Bostic from Adollarsanta, commenting that it would be appropriate to reduce the bond buying program this year, said that he sees the economy in a very strong position. Cleveland Fed’s Loretta Mester finished the parade of Fed officials this week. Loretta Mester on Friday said she sees upside risks to inflation forecasts and that stimulus could be relaxed frequently in the first half of 2022.

Gold price forecast and technical view

Market analyst Christian Borjon Valencia says that gold is trading below its daily movingollary averages, which means the yellow metal is in a downtrend.

Gold price-daily chart

Gold’s failure to retrace $1,800 could open the way for more losses. The first area of ​​demand will be the August 19 low of $1,774.21. After the latter is cleared, the next support is at the August 10 low at $1,717.79. A decisive break there could push the price to test the 2021 low at $1,676.86. On the other hand, if gold reclaims $1,800, gold bulls can take a breather. The yieldless metal will then have to wait for a new catalyst that can guide it.

gold price-4 hourdollarsic chart

Analyst Christian Borjon Valencia states that in this time frame, gold’s price action, maintaining the downward trend, broke the 200 simple movementollarsi average (SMA) to the downside, pointing to the following levels:

A break from the September 8 low of $1,782.47 could open the August 19 low of $1,774.21. If this level is broken, the following key areas of demand would be August 12 lows, around $1,742, followed by August 10 lows at $1,717.79. On the other hand, if the gold bulls retake the 200-SMA, their next targets will be the 100 and 50-SMAs at $1,802.36 and $1,809, respectively.

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Michael Lewis


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