Gold prices slipped on Wednesday as the U.S. dollar strengthened. The greenback rose close to a 20-month peak and made the bullion more expensive for investors using rival currencies. It offsets the safe-haven demand fueled by the escalating crisis in Ukraine. The yellow metal reached an 18-month high of $1,973.96 last week and gained a total of 6.5% in February. Today, spot gold and U.S. gold futures fell by around 0.4%.
Spot gold is currently trading at $1,939.86 per ounce as of 0750 GMT.
Meanwhile, investors are waiting for Federal Reserve Chairman Jerome Powell’s testimony before Congress on March 2 and 3. Central bank officials have all but promised an exit from a zero-rate policy at their March 15-16 meeting. The only thing not sure is how aggressively they would bring down inflation to their 2% target.
St. Louis Fed President James Bullard called for a full-percentage rate hike over the next three meetings. On the other hand, John C. Williams of the New York Fed does not see a need to go big at the start of the rate-hike cycle.
On the technical front, DailyFX strategist Margaret Yang said gold’s breach of the key resistance above opened the door for gains up to $1,954. The overall trend for the bullion remains bullish-biased. The metal posted consecutive higher highs and higher lows, and the MACD indicator is trending above the neutral midpoint. However, she suggested that prices could be vulnerable to a technical pullback.
Yang’s fellow DailyFX strategist Michael Boutros added that gold continues to trade within the ascending channel formation off the February lows. It is attempting to breach a key resistance range for the second time, but an immediate advance could be risky. He advised investors to reduce portions of their long exposure or raise protective stops as gold moves up towards the $1,950-$1,959 range.
FXStreet senior analyst Dhwani Mehta added that gold’s 14-day Relative Strength Index fell below the overbought region, though still in the positive territory. If the metal goes above $1,950, it could then test the multi-month highs of $1,975, she said. On the downside, she sees trendline support at $1,903 and then $1,900 and $1,870.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, jumped 1.3% on Tuesday to 1,042.38 tons. It is the highest level since July 2021.
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