Gold price outlook has deteriorated by extremely hawkish Fed Powell’s comments on Tuesday. S&P500 retreated on the prevalent dismal market mood as more rates from the Fed do a lot to confirm a US recession.
At the time of writing, gold is trading at 1812.63 per ounce. The Gold Index (XAU/USD) witnessed intense selloffs after the comments by Fed chair Jerome Powell, in his testimony before Congress. Powell noted that the US central bank is prepared for more rates than previously anticipated. Considering the fact that consumer spending is resilient and the labor market is extremely tight, the Fed has no other option than to make monetary tools more restrictive.
The US Dollar Index received exceptionally high bids as investors underpinned the risk-aversion theme. The USD Index has refreshed its three-month high at 105.65. The 10-year US Treasury yields have failed to catch the 4.0% resistance despite the extremely hawkish stance from Fed chair Jerome Powell.
US Automatic Data Processing (ADP) Employment Change (Feb) will be in focus now. According to the estimates, the US economy has added fresh payrolls by 200K in the labor market, higher than the former release of 106K.
Gold price is declining towards the eight-day low support placed from February 28 low at $1,804.70. A break below the same would drag it further toward the horizontal support plotted from December 15 low at $1,773.90. The mighty 200-period Exponential Moving Average (EMA) at $1,850.88 has acted as a major barricade for the gold buyers.
Tuesday’s selloff pushed the Relative Strength Index (RSI) (14) into the bearish range of 20.00-40.00, which indicates more weakness ahead.
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Tags FED Gold interest rate hikes Jerome Powell Treasury Yields US dollar index
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