Gold price rebounded further on Wednesday as the US dollar and Treasury yields eased ahead of the Jackson Hole Symposium later in the week. Ordinarily, the easing of the greenback makes the precious metal less expensive for buyers holding foreign currencies. Besides, the recorded decline in Treasury yields has lowered the opportunity cost of holding the non-yielding bullion.
Even with the reported gains, gold price remains under pressure from a stronger US dollar. Earlier in the day, the dollar index hit $104 for the first time since 8th June.
Investors now have their eyes on the Jackson Hole Symposium and Fed Chair’s speech in particular. The annual event comes after the latest FOMC meeting minutes that showed most officials remain concerns over the upside risks of inflation. As such, further rate hikes cannot be ruled out.
Granted, investors have priced in the Fed holding interest rates at the current levels during its next meeting in September. Overall, an environment of high interest rates tend to be bearish for precious metals.
Gold price technical analysis
Gold price extended its previous gains on Wednesday as the bulls strive to reverse the losses recorded in recent weeks. Two weeks ago, the precious metal dropped below the crucial level of 1,950 to a five-month low at 1,884.95 late last week. It has since rebounded to 1,916.77 as at the time of writing.
Even with the gains recorded over the past three sessions, gold price remains under pressure. In fact, my thesis is that it will remain subject to curbed gains for a while longer amid a hawkish Fed and stronger US dollar.
A look at its daily chart shows the asset still trading below the 25 and 50-day EMAs. These indicators, coupled with the downward channel highlighted in black, further substantiate the thesis that the bears are still in control. In fact, a trend reversal will require a move above 1,966.08.
In the immediate term, I expect gold price to remain to continue finding resistance along the 50-day EMA at 1,932.37 while enjoying support along the psychologically crucial zone of 1,900. Further rebounding will likely place the resistance zone at 1,950. On the lower side, it likely has found its short-term bottom at 1,884.95.