22 August
In the Asian trading session on Tuesday, the spot gold price remained range-bound below the $1,900 mark, following a previous day’s positive movement. The XAU/USD pairing exhibited a temporary halt in its recent decline, which had persisted for about four weeks, reaching its lowest point since March 2023 at approximately $1,885 last Thursday. Investors are closely awaiting signals about the Federal Reserve’s policy stance, contributing to the current market uncertainty.
The prevailing anticipation of a hawkish stance from the Federal Reserve has led to higher US Treasury bond yields, bolstering the US dollar. However, the backdrop of a generally cautious market sentiment has provided some support to the safe-haven appeal of gold. Lingering concerns over China’s deteriorating economic conditions and the impact of a modest rate reduction by the Peopleâs Bank of China (PBoC) on Monday have added to the apprehensive market mood.
China’s efforts to restore confidence among gold buyers faced resistance, subsequently challenging the bullish outlook for the precious metal.
Monday witnessed the Peopleâs Bank of China (PBOC) reducing the one-year Loan Prime Rate (LPR) from 3.55% to 3.45%, slightly above the expected 3.40%. Conversely, the five-year LPRs were maintained at 4.20%.
Gold Price exhibits an intriguing pattern with a three-week-old bullish falling wedge formation. Reinforcing the potential for an upward trend are indicators like the Relative Strength Index (RSI) line, which is nearing oversold conditions, and recent bullish signals from the Moving Average Convergence and Divergence (MACD) indicator.
It’s important to highlight that a successful climb of XAU/USD above the $1,903 level is pivotal for Gold Price to target the projected objective of the mentioned falling wedge, approximately at $1,940.
In the upward trajectory, both the psychological resistance level at $1,900 and the 200-bar Simple Moving Average (SMA) around $1,940 are additional factors to monitor.
On the flip side, the lower boundary of the aforementioned wedge, situated near $1,880, provides a support level for the short term. Subsequent to this, a gradual descent towards the earlier swing high of around $1,858 remains a plausible scenario.
– Nitin Kedia
