(Dhwani Mehta – FXStreet)
– Gold price is capitalizing on the post-Fed US dollar sell-off.
– US Treasury yields rebound, challenging the recovery momentum.
– XAU/USD eyes US Q2 GDP for a fresh directional impetus.
Gold price is preserving its less hawkish Fed-induced gains so far this Thursday, as bulls are biding time ahead of the US advance Q2 GDP release. The Fed raised rates by the expected 75 bps at its July policy meeting but abandoned its forward guidance, disappointing the hawks. Fed Chair Jerome Powell and Company’s meeting-by-meeting approach, based on the incoming data, poured cold water on aggressive tightening expectations, despite the Fed dismissing a US recession. This triggered a sharp sell-off in the Treasury yields across the curve, dragging the US dollar sharply lower while boosting the bright metal.
XAU buyers also take it easy heading into the US GDP print, which could likely show a negative reading for the second month in a row, throwing the American economy into a so-called technical recession. Economists are predicting a 0.4% growth QoQ in Q2 vs. -0.1% reported previously. Will the world’s largest economy avert a recession?
Markets also digest expectations of slowing gold demand for the second half of this year, as predicted by the World Gold Council (WGC). In the meantime, gold traders will continue to take cues from the broader market sentiment and the dynamics of the dollar and yields for near-term trading opportunities.
Gold price technical outlook: Daily chart
Gold price is flirting with the bearish 21-Daily Moving Average (DMA) at $1,738 after briefly recapturing the latter, earlier on.
The 14-day Relative Strength Index (RSI) is inching higher but still remains below the midline, suggesting that the post-Fed recovery could be short-lived.
Only daily closing above the 21 DMA will likely confirm a bearish reversal from 16-month lows of $1,681. On the upside, the $1,750 psychological barrier will be next on buyers’ radars, followed by the July 8 high of $1,752.
Alternatively, the immediate support is seen at $1,730 the round figure, below which Wednesday’s low of $1,712 could be tested. The $1,700 threshold will be the last line of defense for gold bulls.
Bitcoin and gold prices are increasing
(Naeem Aslam – Avatrade)
Gold and Bitcoin
Although we see riskier assets such as equity futures finding more bids today and traders supporting the sentiment and picking up the momentum where they left off last night, Bitcoin and gold prices are also increasing. This is primarily due to the reason that the dollar index has weakened, as we discussed previously.
Bitcoin has been under pressure due to the Fed’s monetary policy, and that is, the Fed is increasing the interest rates. But the price action now shows that it is the dollar strength or weakness that matters the most for the bitcoin prices. The fact that we have seen the dollar index coming off its highs, now we do see bitcoin prices moving higher as well. It will be interesting to see if the relationship continues to hold as the Bitcoin price is still not far off from its critical support of 20K.
As of today, BTC and Ethereum prices crossed above the price level of 23K and 1.6K, but the main resistance which will clear the threat of any further downside move is if BTC crosses above the 30K price mark and ETH soars to 2K.