XAU/USD: Upward Momentum Under Pressure Prior Fed Yellen’s Testimony

The safe-haven asset, Gold, is rising ahead of Fed Chair Janet Yellen semi-annual monetary policy testimony. Yellen will testify on the economy and the monetary policy before the Senate and House committees in Washington DC today at 15:00 GMT, while tomorrow, she will testify before the Senate Banking Committee at the same time. Traders will hang on every word of her speech and will expect her to comment for the gradual rate hikes forecasted in the year. If Fed Chair evades stating clearly that Fed will probably raise rates as expected, we may see a drop of the dollar, thus traders ensuring their portfolios with gold.

XAU/USD – Technical Outlook
Gold is creating an aggressive run to the upside over the last two months after the rebound on the $1,122 support barrier. Last Wednesday, the XAU/USD pair found an obstacle on the $1,245 strong resistance level which coincides with the 50.0% Fibonacci retracement level of the last downward move with high at $1,375 on 6th of July, 2016 until the low at $1,122 on 15th of December, 2016.

From a technical point of view, the price is moving between the aforementioned 38.2% and 50.0% fibo levels for more than a week and a penetration in either direction will expose the price. It’s worth mentioning, that the previous technical analysis still stands as we are waiting for the yellow metal to be exposed to the 61.8% fibo level near the $1,275 price level (see the analysis here: “Gold Hovers Near Three-Month Highs as Dollar Shows Some Fatigue”). Otherwise, a penetration below the $1,220 support barrier, it will drive the pair towards the $1,180 critical level.

In addition, the 50 and 100 SMAs, on the daily chart, are moving higher still endorsing the bullish attitude on price. However, the Relative Strength Index (RSI) after the pullback from the overbought area, it slipped lower. Despite that, currently the index is sloping to the upside, adding to the odds for further rising of metal’s price.


JFD Research