The gold spot price (XAUUSD) remained relatively firm in Thursday’s trading despite hawkish comments from Jerome Powell in Wednesday’s Federal Reserve interest rate decision. Powell announced that interest rates in the US would remain unchanged and revealed that he didn’t believe that a rate cut in March was likely, given the recent economic data.
However, he did acknowledge that it would be appropriate to start cutting rates this year, keeping the gold bulls in play. Furthermore, troubles at US lender New York Community Bancorp increased the appeal for safe-haven assets, along with continued geopolitical tensions in the Middle East, underpinning gold’s momentum leading up to the pivotal US NFP report.
Technical
On the 4H chart, a rising wedge has emerged. Support at $2,039.53/ounce could be pivotal in the upcoming session to determine whether the breakdown will occur. While the 25-SMA (green line) has crossed above the 50-SMA (blue line) and 100-SMA (orange line), the RSI indicates potential divergence, opening the door for a bearish pullback.
If the breakdown occurs, the Fibonacci midpoint at $2,033.48/ounce could be the first level of interest at the prior psychological supply zone. The 25-SMA backs this support and could act as a pivot to the potential breakdown retracement. However, if the price moves lower, the 61.8% Fibonacci golden ratio could likely become a destination at $2,028.15/ounce in the upcoming sessions, where the 50-SMA will provide further support.
However, the uptrend could remain in play within the wedge formation if the price fails to move below $2,039.53/ounce. Resistance at $2,048.39/ounce could then come under the spotlight, as an additional move above his level could steepen the uptrend toward $2,056.82/ounce.
Summary
The gold spot price held firm despite hawkish comments from Jerome Powell following the interest rate decision. However, the rising wedge is at risk of a breakdown, making the NFP report later today pivotal in determining the directional trend for gold as we advance.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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