The recent movement in the price of gold, as depicted by the XAU/USD chart, has been quite volatile. While there was a significant rise above the $2390 level on Friday, indicating a bullish trend, the price subsequently fell to $2360 per ounce on Monday. This sudden decline suggests that the bulls were unable to maintain control over the market, leading to a bearish sentiment. The question arises – could the gold price decline further in the coming days?
Technical Analysis Perspective
Analyzing the XAU/USD chart from a technical standpoint reveals some interesting patterns. The price of gold seems to have a clear support level around the $2300 area. Each time the price dipped below this level in June, it quickly rebounded, showcasing sustained demand. Additionally, the price action since April suggests the formation of a descending channel, with recent bearish movement pushing the price back within this channel. The signs of seller activity in the $2380-2400 range indicate a possible continuation of the downward trend towards the crucial support at $2300.
External Influences on the Gold Market
One crucial factor that is likely to impact the gold market in the coming days is the upcoming testimony of Federal Reserve Chair, Jerome Powell, before Congress. Powell’s statements, especially if he hints at weaknesses in the US economy, could potentially provide a positive boost to the gold price. An indication of a possible interest rate cut in September, backed by a high probability according to CME’s FedWatch Tool, might increase the attractiveness of non-yielding assets like gold in a low-interest-rate environment.
The recent movements in the gold market suggest a potential shift towards a bearish trend, with technical indicators pointing towards a possible decline in the price of gold in the coming days. External influences, particularly the statements of Jerome Powell, could play a significant role in shaping the market sentiment. Traders and investors are advised to closely monitor these developments and adjust their strategies accordingly to navigate the volatile gold market successfully.