Gold Meets Strong Resistance at $1,735, Awaits Fed Chair Testimony and US Data

Gold Meets Strong Resistance at $1,735, Awaits Fed Chair Testimony and US Data

Gold (XAU/USD) has staged a strong recovery from yesterday’s near-$1,700 leg-down and is now faced with the $1,735 resistance. At press time, the yellow metal is trading around the $1,731 level, marking a 0.35% gain early in the European session.

The dollar index fell by about 0.5% yesterday, giving gold more steam to recover major portions of its early decline following the Fed’s announcement that it would begin buying corporate bonds through the Secondary Market Corporate Credit Facility (SMCCF).

The apex bank has launched several emergency facilities over the past three months to cushion the economic impact of the Coronavirus outbreak. Consequently, its balance has grown by over $3 trillion since March.

Gold’s recovery and the US dollar weakness could be turned over if the number of Coronavirus cases continues to rise in China, the US, and in other nations across the globe. The equities markets in Asia, the US, and Europe fell yesterday following renewed fears of a second wave of the virus outbreak. However, the equity market sentiment turned risk-on in the American trading session most likely as a result of the Fed’s announcement. If this sentiment stays on, the dollar could come under immense selling pressure which will help gold print more gains.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — June 16

XAU/USD Major Bias: Bullish

Supply Levels: $1,735, $1,745, and $1,753

Demand Levels: $1,717, $1,710, and $1,705

Gold is currently locked in a battle with the $1,730-35 level. Sellers will be looking for an opportunity to send gold lower if it drops below the $1,722 level. Failure of bulls to defend this line could send prices down to the $1,711 level (baseline of our ascending channel). Alternatively, a break above the $1,735 level could send prices higher. Also, market participants will be looking at the US retail sales data and the US Fed Chair testimony set for later in the day. A dovish comment from Powell could send gold flying above the $1,735 with ease.

Note: Learn2.trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results

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