“The current USD cycle has likely peaked. The US Federal Reserve may be on track to deliver further rate hikes, but markets are now reassessing how high the fed funds rate will go, considering the sharp tightening in financial conditions.”
“Growth concerns are rising, with the US equity market discounting a reasonable chance of a recession.”
“Further eroding the dollar’s appeal is the European Central Bank’s hawkish pivot, which is prepping the market for rate hikes and pushing the EUR higher. This should provide some relief for gold prices.”
The daily chart shows that the gold price rebounded after testing bids below the confluence of the horizontal 21 and 200-Daily Moving Averages (DMA) at $1,837.
As well predicted here, Wednesday’s doji candlestick signaled caution for bulls, as bears fought back control.
Traders now lookout for critical support and resistance levels heading into the US inflation showdown.
The 14-day Relative Strength Index (RSI) is inching slightly lower, suggesting that bears are likely to remain in charge going forward.
Sellers await a firm daily closing below the abovementioned $1,840 support to initiate a fresh downswing towards the $1,820 round level.
Ahead of that bears will challenge Tuesday’s low of $1,837, followed by the previous week’s low of $1,827.
Alternatively, the immediate upside now remains capped by the falling trendline resistance at $1,848.
Any further upside will gold bulls will need to find acceptance above this week’s high of $1,862.
The previous week’s high of $1,870 will guard the further upside, as bulls will then keep their sight on the monthly top of $1,875.