Spot gold slides as the greenback strengthen ahead of U.S. Fed Powell testimony

June 22, 2022 - 2 weeks ago
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The precious yellow metal softens further since U.S. traders returned from a three-day holiday weekend, as Monday was closed in observance of Juneteenth.

Meanwhile, the US dollar index (US DXY), which tracks the greenback against a basket of its peers, edges higher at 104.40.

Eyes now turn to U.S. Federal Reserve chairman Jerome Powell when he testifies on monetary policy before the Senate Banking Committee Wednesday and Friday.

Although it is unclear if Fed Powell will break new ground from last week’s rate hike, however, his testimony will be crucial after inflation fears triggered the central bank to raise its benchmark borrowing rate by 0.75 percentage points, from 1.00% to 1.75%.

Investors are now considering another such mega-hike at its next meeting in July.

However, U.S. Fed Chair Jerome Powell said increases of three-quarters of a percentage point would not be common.

Based on the technical assessment, the Relative Strength Index (RSI) indicator, 3-daily ‘lookback’ holds a negative bias, while the Moving Average Convergence Divergence (MACD) supports a weak positive bias. The ADX indicator holds to a ranging market.

With the $1,830 level penetrated, we could now see the bears weigh on the market further and focus on the region of $1,801-04 – Reassess from there.

Viewing the topside, the resistance is located at $1,836-38, with $1,850-52 assessed above.

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