Gold keeps the post-Fed gains as bulls flirt with $1,755 during the initial Asian session on Thursday. The yellow metal jumped after the dovish Federal Reserve (Fed) propelled market sentiment and dragged the US dollar to the south.
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The recent force could be comments from China suggesting to seek a reversal of the punitive measures levied during Donald Trump’s rule as Beijing prepares for the first virtual meeting with US President Joe Biden.
Will Biden extend the Fed-led rally?
Gold buyers hold on to the post-Fed gains amid hopes of receding US-China tussles. However, it won’t be easy as the Biden administration has already signaled to stay firm and frank during the scheduled key meeting.
The bullion’s stellar run-up after the Fed’s inability to provide rate-hike hints also has challenges as a second reading to the dot-plot suggests that seven policymakers see a lift-off in the fed funds rate from zero in 2023, versus five in December. It should also be noted that the US-Iran and America-North Korea tension, coupled with the vaccine crisis in the European Union (EU), re extra hurdles to the commodity’s latest run-up.
Even so, the latest strength in the Wall Street benchmarks may help the gold buyers to stay hopeful unless the US Treasury yields don’t extend the post-Fed jump.
Hence, it all depends upon how well US President Biden manages to tame China’s wishes while also refreshing relations with the world’s second-largest economy. Additionally, the central bank and the policymakers’ comments from Australia and the UK may as well provide an active day ahead.
Gold Technical analysis
A clear break of 21-day SMA, currently around $1,742 enables the bulls to aim for crossing the 2.5-month-old resistance line, at $1,755 now, which in turn will attack the $1,770 hurdle to the north. Meanwhile, a downside break of $1,742 should recall the sellers targeting the $1,700 threshold.
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