Home » Gold price approaches all-time highs though Fed Powell maintains hawkish rhetoric

Gold price approaches all-time highs though Fed Powell maintains hawkish rhetoric

by FX BrokerNews
  • Gold continues its positive run, shrugging off Fed Powell’s hawkish stance.
  • The allure of the US Dollar diminishes amid concerns raised by February’s PMI data on the robustness of the US economic outlook.
  • US ADP reports private payrolls at 140K in February, falling short of the expected 150K.

Gold price (XAU/USD) holds steady near $2,140.00 during Wednesday’s early New York session following a report from the United States ADP Research Institute. The data reveals lower-than-expected private payrolls for February, with US private employers hiring 140K job-seekers, below the market’s anticipation of 150K but higher than the revised figure of 111K in January.

Despite Federal Reserve (Fed) Chair Jerome Powell refraining from providing a specific timeline for rate cuts, the precious metal continues its upward trajectory. In his prepared statement for the semi-annual monetary policy report presented to Congress, Powell expressed uncertainty about inflation returning to 2%. He indicated that interest rates are likely at their peak in the current tightening cycle, stating, “It will likely be appropriate to begin dialing back policy restraint at some point this year.”

Market attention will shift to the JOLTS Job Openings data for January in today’s session, offering additional insights into labor demand.

Daily digest market movers: Gold price extends its upside as US private payrolls miss expectations

  • Gold price stands firm despite Federal Reserve Chair Jerome Powell refraining from providing significant guidance on the timing and degree of rate cuts this year. Powell, in his prepared remarks, expressed uncertainty about the economic outlook and was not convinced that inflation would reach the 2% target.
  • Jerome Powell stated, “We do not expect it will be appropriate to reduce policy rates until we have greater confidence in inflation moving sustainably toward 2%.” Market expectations for rate cuts in the June policy meeting remain strong, with the chances of a 25 basis points (bps) rate cut increasing to 59% from 53% on Tuesday, according to the CME Fedwatch tool.
  • Meanwhile, market participants await the release of US JOLTS Job Openings for January at 15:00 GMT. Forecasts indicate that US employers posted 8.9 million new job openings in January, compared to 9.027 million in December.
  • The US Dollar Index (DXY), measuring the Greenback’s value against six major currencies, continues its four-day losing streak on Wednesday. The USD Index drops to an almost two-week low near 103.50 as weak ISM Manufacturing and Services PMIs for February point to slowing economic growth.

Technical Analysis: Gold price reclaims $2,140

Gold price is nearing the all-time high near $2,145 and is currently trading within Tuesday’s trading range. In the near term, Gold’s outlook remains bullish following a breakout from the Symmetrical Triangle pattern observed on the daily time frame. The breakout from this chart pattern suggests a volatility expansion, resulting in broader upward movements and increased trading volume.

The 14-period Relative Strength Index (RSI) remains above 60.00, signaling a bullish momentum. Although the RSI (14) is not indicating any divergence signals, it has entered overbought territory.

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