The strengthening of the US dollar was seen to continue to add pressure on gold trading in Tuesday's trade, but gold prices began to show a rebound in today's (Wednesday) trade.
Examining the price movement on the XAU/USD chart which measures the value of gold against the US dollar yesterday, the price initially displayed a rise to the level of 1830.00 has re -declined continuing the decline in the European session continued until the New York session.
Driven by the strengthening of the US dollar in the New York session, the US producer price index (PPI) data published for May still showed inflation risk with the reading reaching an expected 0.8% surpassing the previous month’s reading of 0.5%.
Gold, which continued to fail to look for opportunities to rise, continued to sink lower, hitting around 1805.00 until the end of the New York session following rising US bond yields and the strengthening of the US dollar ahead of the FOMC meeting.
It is forecast that the US dollar will continue to rise ahead of the FOMC meeting early Thursday morning, where the Federal Reserve (Fed) is likely to implement an interest rate hike of up to 75 basis points.
The price on the XAU/USD chart in the Asian session this morning has shown a rebound but is still hovering below the Moving Average 50 (MA50) barrier level on the 1 -hour time frame for the price movement signal is still in a bearish trend for gold.
The price increase is seen to face resistance in the RBS zone (resistance become support) 1830.00 which was also tested on Tuesday yesterday. A rise above that level will give an early signal for a reversal of the trend.
The next continued higher rise will re-target the previous focus zones such as at 1850.00 or higher heading back to the 1870.00 resistance zone.
On the other hand, if the decline in the price of gold continues today, the decline is likely to reach the support zone at 1800.00 to record the latest 4 -week low.
