- Gold picks up the bids, up for third straight day.
- US dollar weakness favord bulls amid risk-on mood.
- Powell can reiterate cautious optimism but a mention of reflation woes may be worrisome.
Gold refreshes intraday high to $1,814.93, up 0.22% on a day, during Tuesday’s Asian session. In doing so, the quote rises for the third consecutive day amid the US dollar weakness and upbeat market sentiment. However, the cautious mood ahead of Federal Reserve Chairman Jerome Powell’s bi-annual testimony tests the bulls.
The latest push to the yellow metal should have taken clues from the chatters of removing the virus-led activity restrictions from Tokyo and Australia’s Victory. Also favoring the mood could be the news suggesting China’s likely economic recovery, shared by Economic Information Daily.
It’s worth mentioning that the US policymakers are also on the move towards passing the much-awaited covid relief stimulus and favor the risk-on mood. Recently CNN’s Manu Raju tweeted, “(US ex-Treasury Secretary Steve)Manchin said that he would make that move if parliamentarian finds wage hike within rules of reconciliation. ‘I would amend it to $11,’ he said. ‘We can do $11 in two years and be in a better position than they’re going to be with $15 in five years.’”
On the contrary, Citi Bank’s analyst cuts 6-12 month gold point-price target to $1,950/oz versus $2100 previously expected. The analysts highlight the recently gained importance of cryptocurrencies versus gold while saying, “Contrasts net outflow from gold-backed exchange-traded funds in recent months with an increase in outstanding shares for the Grayscale Bitcoin Trust”.
Amid these plays, S&P 500 Futures print 0.20% gains while the US 10-year Treasury yields refrain from moving amid off in Japan.
Looking forward, nothing becomes the key ahead of Powell and hence market may remain lackluster, can keep the previous trend in search of fresh clues. Given the mixed data from the US and one-year high yields, it will be a tough task for the Fed Chief to reiterate his cautious optimism.
Read: Dollar outlook: How will surging treasury yields affect Powell’s testimony
Technical analysis
21-day EMA joins a downward sloping trend line from January 06 to highlight $1,818-19 as the near-term key resistance. Meanwhile, gold sellers are less likely to return unless witnessing a daily close below the early month low near $1,785.