Gold, XAU/USD, Fed, Jerome Powell, US Retail Sales, Technical Analysis – Talking Points:
- Gold prices traded flat as risk aversion boosted USD, sank bond yields
- Rosy US retail sales and University of Michigan sentiment are key risks
- XAU/USD may form bullish crossover between key SMAs on 4-hour chart
Anti-fiat gold prices traded relatively flat over the past 24 hours, struggling to add to gains developed since late May. The yellow metal was facing conflicting fundamental forces. Longer-term Treasury yields declined on Thursday as the US Dollar strengthened. This likely reflected investors seeking safety as stocks on Wall Street weakened. The Nasdaq Composite finished 0.70% lower.
Weakness in US equities followed Fed Chair Jerome Powell’s testimony to Congress. The central bank Chief continued to downplay recent rising inflationary pressures, adding that the economic recovery had not progressed enough to proceed with tapering asset purchases. Meanwhile, rising Covid cases amid the emerging Delta variant have likely been pouring cold water on the recovery outlook.
With that in mind, XAU/USD is eyeing a couple of key US economic event risk heading into the weekend. Retail sales and University of Michigan sentiment are due to cross the wires over the remaining 24 hours. The former is expected to clock in at -0.3% m/m in June. Preliminary estimates for the latter are anticipated at 86.5.
According to the Citi Economic Surprise Index, US data has been tending to outperform relative to expectations as of late. However, the margin of rosy surprises has been notably shrinking over the past year. Still, upside outcomes from retail sales and consumer sentiment could help improve the economic outlook. If bond yields and the US Dollar follow higher as a result, gold could stand to lose to wrap up the week.
Gold Technical Analysis
On the 4-hour chart, gold recently pierced the 1810 – 1818 zone of resistance. XAU/USD is attempting to hold a push above the 200-period Simple Moving Average (SMA). Meanwhile, the 50-period SMA is creeping higher. A bullish crossover may occur in the near term, opening the door to a broader upside technical bias. Still, negative RSI divergence warns to proceed with caution.
XAU/USD 4-Hour Chart
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
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