Gold prices rebounded from a one-month low on Wednesday amid weakening bond yields and the dollar. Traders are awaiting the release of US consumer price data, which could become an argument for or against further interest rate hikes by the Federal Reserve (Fed).
The dollar index declined from the previous figure. Long-term US treasury yields fell on Tuesday after Moody's downgraded the credit rating of several small and medium-sized US banks. That renewed investors’ concerns about the state of the banking sector.
Fed officials still have time to study the data before deciding whether to raise the rate further, Richmond Federal Reserve President Thomas Barkin said on Thursday.
At the same time, according to Philadelphia Federal Reserve President Patrick Harker, the US central bank could leave interest rates unchanged. Only a sharp change in economic data can prevent this.
The precious metal could be supported by concerns over the health of the world's largest economy.
Meanwhile, the gold market continues to hold its ground.
In their July report, analysts at the World Gold Council (WGC) reported that the amount of liquid assets in the global ETF market declined by 34 tons. This figure equates to $2.3 billion.
Global flows of the precious metal have reached the $4.9 billion mark over the past year. This means a reduction in the yellow metal's reserves by 84 tons.
The gold price is in a broad correction on the H4 timeframe.
In terms of wave analysis, the price is forming the second descending wave.
The RSI (standard values) shows divergence. This divergence gives a leading signal for the change of trend, in other words, the transition of the second wave to the third ascending one.
The rebound of the price from the monthly low of 1923 indicates the price movement towards the resistance of 1985.
Signal:
The short-term outlook for the XAUUSD is to buy.
The target is at the level of 1985.00.
Part of the profit should be fixed near the level of 1947.00.
A Stop-loss should be placed near the level of 1890.00.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
