Gold Hits Lowest Level in Three Months, Threatens $1,900 Support
2023.06.28 15:06
prices dropped for a second day in a row on Wednesday as recent (but not entirely new) hawkish comments from Federal Reserve Chair Jerome Powell boosted the US dollar weighing on the yellow metal.
At the time of writing, spot gold price, , is trading at $1,912 an ounce, just below its opening price, after hitting a three-and-a-half-month low of $1,902 earlier on the day.
Speaking at the European Central Bank (ECB) Forum on Central Banking, Fed’s Powell noted that while the United States is vulnerable to a recession, the chances are slim. Regarding interest rates, Powell said that he would not rule out back-to-back rate hikes. “Although policy is restrictive it may not be restrictive enough and it has not been restrictive for long enough,” he added.
Hawkish comments from Powell reignited USD strength, pressuring the yellow metal that struck its lowest level since mid-March before trimming losses.
From a technical perspective, the XAU/USD pair holds a mildly bearish short-term bias, although it has managed to keep above the critical $1,900 area. While the RSI and the MACD indicators are in negative territory, the 20- and 100-day simple moving averages (SMAs) are completing a bearish cross.
The metal would need to recover above $1,943 (SMAs crossover level) to ease the immediate pressure and target a steeper bounce to the $1,970 area. On the other hand, the loss of the $1,900 mark would add further pressure on the price, with the following significant support seen at the 200-day SMA at the $1,855 zone.
