Should the dollar fail to capitalize on Powell’s remarks, gold prices could see more gains ahead of the weekend
Gold prices keep trading within a relatively tight range these days, struggling for direction. The yellow metal closed with marginal gains overnight amidst shrinking open interest and volume. As such, further consolidation should not be ruled out in the short term.
On the upside, the $1,810 area remains in focus. In this zone, the 100- and 200-DMAs converge, representing the immediate barrier for buyers. On Friday, the bullion is flirting with the $1,800 psychological level as investors await Powell’s speech due later today.
The dollar is back under some pressure following a short-lived bounce seen yesterday. However, a hawkish tone from the Federal Reserve could push the greenback higher across the board later today. Of note, fresh calls for early tapering from a few hawkish Fed policymakers unsettled investors yesterday and lifted the dollar at the same time.
Should the dollar fail to capitalize on Powell’s remarks, gold prices could see more gains ahead of the weekend. Gold traders will also await the US PCE inflation data. The upside breakout could re-open doors towards the $1830 area last seen in early-August. However, the precious metal is yet to settle above the $1,800 figure and make a decisive break above the mentioned simple moving averages in the $1,810 region.
Of note, the price is approaching a slightly ascending 20-week SMA, extending gains for the third week in a row. Interestingly, this moving average also arrives at $1,1810, strengthening this immediate resistance. As such, the bullion may need a solid driver to overcome this hurdle which could trigger a technical pullback. On the downside, the 20-DMA (today at $1,882) represents the immediate significant support. As long as the XAUUSD pair stays above this moving average, downside risks are limited.