Gold Technical Analysis: Gold Still Facing Downward Pressure

Mahmoud Abdallah

Gold futures settled lower, to continue falling to the fourth session in a row. However, with the dollar weakening, the downside for gold was marginal. Since the start of this week's trading, the price of gold has been moving in narrow ranges with a downward tendency between the level of $1847 an ounce and the level of $1824 an ounce, and it is settling around the $1835 level at the time of writing the analysis.

Investors digested Federal Reserve Chair Jerome Powell's testimony before the Senate Banking Committee. In prepared remarks, Powell indicated that the Fed plans to continue moving quickly to combat inflation but said the US economy is strong enough to handle tighter monetary policy. However, Powell later admitted that achieving a "soft landing" would be "very difficult" in part due to factors beyond the Fed's control and noted that a recession is "a sure possibility".

Powell added that the pace of interest rate hikes in the future will depend on incoming data and the evolving outlook for the economy and suggested that the Fed would need to see "convincing evidence" that inflation is slowing before it begins to scale back its monetary tightening plans. The Fed chief added that the central bank would strive "to avoid adding uncertainty in what is already a very difficult and uncertain time."

Technical analysis of the gold price XAU/USD:

According to the recent performance of the gold price, technical indicators are moving in relatively neutral ranges. Narrow trading in limited ranges warns that there is a strong movement in one of the two directions to come, but there is anticipation for what will lead to that. I still prefer to buy XAU/USD gold from every bearish level, despite the strong demand of global central banks to tighten their monetary policy, which is negative for the gold market. It finds momentum from other factors, most notably global geopolitical tensions led by the Russian / Ukrainian war, as well as fears of an economic recession world in the coming period. Gold is a traditional safe haven in those times.

The closest buying levels for gold at the moment are 1820, 1805 and 1785 dollars, respectively. On the other hand, the bulls may find enough momentum to launch further higher if the XAU/USD gold price breaches the resistance level of $1855 an ounce again.

Gold

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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