Gold prices have slipped below $1,840.00, as the risk-off market mood has taken hold of the markets. Escalating tensions between the United States and China, and the launch of projectiles from North Korea near Japan’s Exclusive Economic Zone (EEZ) have contributed to the decline of Gold prices, as well as the strengthening of the US Dollar. Meanwhile, the Federal Reserve (Fed) Governor, Michelle Bowman, has commented that the central bank still has “a long way to go” to scale down inflation to 2%.
The US Dollar Index (DXY) has risen above 103.70, as investors are concerned about the higher-than-anticipated US Consumer Price Index (CPI), Producers Price Index (PPI), and monthly Retail Sales data, which have triggered the risk of a revival in the inflationary pressures. Meanwhile, S&P500 futures have dropped, in anticipation of the continuation of the restrictive policy stance by the Federal Reserve.
Gold prices have seen a rebound, as the downside momentum on an hourly scale has begun to lose steam. The Relative Strength Index (RSI) (14) has made a higher low, suggesting a bullish reversal. The Gold price has moved above the 50-period Exponential Moving Average (EMA) at $1,836.42, which indicates that the short-term trend is now bullish. Broadly, the Gold price is oscillating in a Falling Channel chart pattern, and a breakout of the chart pattern is needed for the price to move higher.
Overall, Gold prices have been affected by a number of factors in recent weeks. The risk-off market mood, the US-China tensions, the launch of projectiles from North Korea, and the comments from the Fed Governor have all played a part in the decline of Gold prices. Investors should brace for volatility, as the equity markets in the United States will remain closed on Monday due to Presidents’ Day. Going forward, it will be interesting to see how the Gold price reacts to the various geopolitical and economic developments.
