Gold keeps the post-Fed gains as bulls flirt with $1,755 during the initial Asian session on Thursday. The yellow metal jumped after the dovish Federal Reserve (Fed) propelled market sentiment and dragged the US dollar to the south.
The recent force could be comments from China suggesting to seek a reversal of the punitive measures levied during Donald Trump’s rule as Beijing prepares for the first virtual meeting with US President Joe Biden.
Will Biden extend the Fed-led rally?
Gold buyers hold on to the post-Fed gains amid hopes of receding US-China tussles. However, it won’t be easy as the Biden administration has already signaled to stay firm and frank during the scheduled key meeting.
The bullion’s stellar run-up after the Fed’s inability to provide rate-hike hints also has challenges as a second reading to the dot-plot suggests that seven policymakers see a lift-off in the fed funds rate from zero in 2023, versus five in December. It should also be noted that the US-Iran and America-North Korea tension, coupled with the vaccine crisis in the European Union (EU), re extra hurdles to the commodity’s latest run-up.
Even so, the latest strength in the Wall Street benchmarks may help the gold buyers to stay hopeful unless the US Treasury yields don’t extend the post-Fed jump.
Hence, it all depends upon how well US President Biden manages to tame China’s wishes while also refreshing relations with the world’s second-largest economy. Additionally, the central bank and the policymakers’ comments from Australia and the UK may as well provide an active day ahead.
Gold Technical analysis
A clear break of 21-day SMA, currently around $1,742 enables the bulls to aim for crossing the 2.5-month-old resistance line, at $1,755 now, which in turn will attack the $1,770 hurdle to the north. Meanwhile, a downside break of $1,742 should recall the sellers targeting the $1,700 threshold.