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Gold Prices Seesaw After GDP And Powell's Comments

By Alex BoltyanCommoditiesJun 29, 2022 10:54AM ET
www.investing.com/analysis/gold-prices-seesaw-after-gdp-and-powells-comments-200626472
Gold Prices Seesaw After GDP And Powell's Comments
By Alex Boltyan   |  Jun 29, 2022 10:54AM ET
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Gold prices seesaw between small gains and losses on Wednesday as investors assessed weaker-than-expected US GDP data and hawkish comments from Fed Chairman. The spot, XAU/USD, is currently trading at the $1,820 area, having hit a low of $1,812 earlier on the day and a high of $1,833 an ounce as the knee-jerk reaction to US GDP data.

Data showed that the annualized US GDP contracted by 1.6% in the first quarter, missing the market expectations of a 1.5% contraction. The figures fueled recession fears in the US as the Fed carries out its contractive monetary policy and inflation remains at a four-decade high.

Meanwhile, US yields – considered the opportunity cost of holding gold – continued to pull back on Wednesday, making the yellow metal more attractive. The yield on the United States 10-Year note slipped to 3.12%.

At the same time, headlines from the ECB Forum on Central Banking are crossing the wires. At a policy panel shared with ECB and BoE leaders, Fed Chair Jerome Powell reiterated the FOMC’s commitment to bring down inflation. He added that while the Fed is not targeting the foreign exchange rate, dollar strength is disinflationary at the margins.

XAU/USD daily chart.
XAU/USD daily chart.

From a technical standpoint and according to the daily chart, the spot price holds a short-term bearish perspective. The XAU/USD trades below its main major moving averages, while its indicators remain in negative territory. The RSI gains a positive slope but remains below its midline, while the MACD keeps printing red bars.

Immediate support for the XAU/USD is seen at the $1,810 area, followed by the $1,800 psychological level and then the May low at $1,786. On the upside, the buyers must regain the $1835-45 area, where the 20- and 200-day SMAs converge. A break above the latter could pave the way to the $1,880 zone.

Gold Prices Seesaw After GDP And Powell's Comments
 

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Gold Prices Seesaw After GDP And Powell's Comments

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