XAUUSD eyes sustained break below $1,900 amid USD strength

  • The price of gold looks vulnerable at around $1,900.00, eyes more to the downside following the breakout of consolidation.
  • The DXY climbed above 102.00 despite weak US durable goods orders.
  • The formation of an inverted flag dictates more weakness ahead.

The price of gold is back in the red zone after experiencing a temporary reprieve, as the US dollar continues to reign supreme amid multiple concerns, with growth risks topping the list. The ongoing Russian-Ukrainian crisis, a potential EU embargo on Russian oil imports, Chinese lockdowns and finally, inflation and global economic growth risks keep investors on edge, so that they seek refuge in the safe haven US dollar at the expense of XAUUSD. On Tuesday, upbeat U.S. Durable Goods Orders data contributed to the dollar’s strength. However, the sell-off in US equities driven by downside risk helped the price of gold look like another safe bet.

Read also : Gold Price Prediction: XAUUSD Remains Exposed to $1,880 on Fed’s Hawkish Bets

Going forward, in the absence of leading US economic releases, general market sentiment and Fed expectations will continue to influence USD valuations, which will ultimately impact the price of gold. Skyrocketing expectations of a 50 basis point (bp) interest rate hike by the Federal Reserve (Fed) in May Monetary policy is pushing the DXY higher as if there were no tomorrow. The asset is quickly exploding all its barricades and has firmly climbed above the round resistance of 102.00.

Investors also remain focused on Thursday’s US gross domestic product (GDP) numbers. A preliminary estimate of US annual GDP at 1.1%, calls for an underperformance from the previous print of 6.9%.

Gold technical analysis

On an hourly timeframe, XAU/USD forms an inverted flag chart pattern that signals a consolidation phase after a rapid bearish move. In this phase of consolidation, participate the investors who did not profit from the previous fall and those who prefer a continuation bet rather than a reversal. The 50 and 200 period exponential moving averages (EMA) at $1,910.23 and $1,935.43 respectively are declining, signaling that a downtrend is intact. Meanwhile, the Relative Strength Index (RSI) (14) is hovering in the 40.00-60.00 range, signaling consolidation.

Gold hourly chart