Fed Chair Testimony will bring volatility for Gold


Since morning Gold prices have been trading in a tight range in the Comex division. As market players stayed on the slide line. Ahead of more cues on monetary policy from a today testimony by Fed Chair.

Powell is set to testify before Congress at 8.30pm. Which will likely outline the path of interest rates in the coming months. But markets are unsure over what tone the Fed Chair will set. Given that while inflation unexpectedly rose in January, other economic indicators showed the U.S. economy was cooling.

Comex  gold futures traded slightly lower by 0.1% to $1,843.34 an ounce during early European trade.

Rising interest rates bode poorly for gold, given that they increase the opportunity cost of holding non-yielding assets. But signs of cooling economic growth in the U.S.. Has brewed some speculation over the Fed lacking sufficient economic headroom to keep raising rates.

Still, the prospect of higher interest rates saw gold prices fall sharply from highs hit in January.

Dollar rebounded from the day’ low 104.123 and trading at 104.443, slightly up by 0.14%. Any rate hike statement appears to set upside momentum or vice versa.

Technical outlook

Since 1 March 2023, Gold prices have been struggling to break its immediate resistance 56055 and retreating towards immediate support 55580.  This price action is creating a pennant pattern on the above intraday chart.

However, the chart is not yet completed but either side breaks it appears to set a big move in days to come.  

Adding to this, RSI 14 and its 9 SMA is giving a negative cross over which indicates bearishness in near future.

Hence, Fresh sell could expect below 55720 Target 55580 (if prices break 55580, then next target would be 55250).  On the upside, immediate stop loss will be 55855.

Alternatively, if prices are unable to break below 55580 then there would be a possibility for a bounce back and Gold prices may jump towards 55850-56000 again.

Overall sentiment will remain volatile during the Fed chair speech, and Gold prices will react according to the statement. Hence trade with above levels.