Gold, US Dollar, XAU / USD, Fed bets, Death Cross – talk points
- Gold prices hit after Fedi Clarida tightened bets
- Reporting non-farm payroll on Friday is likely to be vital toward gold
- XAU /USD sees the possible formation of the Death Cross on the horizon
Gold ran this week until it rose sharply US dollar. Federal Reserve Deputy Chairman Richard Clarida on Wednesday strengthened the Fed’s interest rate hikes. Mr Clarida’s comment indicated that economic conditions were strengthening significantly, so that a possible restrictive timetable is likely to be justified at the end of this year. An experienced economist acknowledged the growing threat of the Delta variant with a large transfer.
Nevertheless, market participants pushed the US dollar higher as Fed’s already amazing stakes intensified. The strength of the greenback pulled the price of gold down. Yellow metal tends to weaken as Greenback strengthens due to higher holding costs by foreign investors. Gold is also seen as a moderator of inflation for some, although this function is still disputed in many quarters. However, keep in mind that this is true, and the accelerated view of tightening the Fed is likely to work to the detriment of gold prices. This is because higher interest rates usually curb price rises.
However, the current focus of gold is unlikely to be on inflation. Moreover, the market has largely capitulated to the Federal Reserve’s temporary position on price increases. On the horizon of gold prices and markets is the report on non-agricultural wage statements on Friday (NFP -d). Analysts expect 870,000 jobs in July. Given the central bank’s focus on the labor market, data related to the consensus view are likely to be crucial for monetary policy contributions. With this in mind, better-than-expected NFP printing is likely to weigh on gold prices, increasing the strength of the USD. Alternatively, the miss may benefit from yellow metal.
Golden technical outlook
XAU prices saw higher earlier this week, but failed to stay above the 50- and 200-day moving average (SMA). The declining 50-day SMA has risen over the past few weeks and now appears to be on the verge of Surmar. This would probably put technical pressure on the bear bear gold and perhaps pull it back below the psychologically imposing 1800 level.
Golden daily schedule
The chart is created using TradingView
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– Written by Thomas Westwater, DailyFX.com analyst
Be in touch Thomas, use the comments section or below @FxWestwaterTwitter