Image Source: Pixabay
 

Gold looks to Fed Powell for clues. DAX steadies around the 2023 high.
 

Gold looks to Fed Powell for clues

• Gold eases from 3-week high
•  Fed Chair Powell could set the direction
• 20 SMA offers support

Gold is holding steady below 1850 after reaching a three-week high of 1858 in the previous session as investors hold back from placing fresh bets ahead of US Federal Reserve Chairman Jerome Powell's testimony.

Jay Powell will testify in a bi-annual monetary policy report before the Senate Banking Committee today and the House Financial Services panel tomorrow.

Powell will likely be questioned on the fed's policy of hiking interest rates to rein in inflation, and the US economy's ability to be able to withstand these hikes without tipping the US economy into recession

Investors will be looking for any hints about the future path of monetary policy and the size of a potential rate hike in March. The market is currently pricing in a 30% probability of a 50 basis point hike. Meanwhile, the terminal rate is expected to be around 5.5%. Any hints that this could be higher, owing to stickier-than-expected US inflation, could boost the dollar and drag gold prices lower.

Meanwhile, should Powell focus on the disinflation narrative, Gold could get a lift.
 

Where next for Gold prices?

Gold rebounded from 1806 at the end of February, breaking out of a falling wedge pattern. The price rose above the 20 sma hitting resistance at 1858, the 3-week high. The price has eased back but is finding support on the 20 sma. The RSI is neutral. Should buyers successfully defend the 20 sma at 1841, buyers could look to retest 1858, ahead of 1870, the 50 sma, and February 14 high.

A break below the 20 sma could see sellers test 1835, the March low, ahead of 1819 the low on February 17, before bringing 1806 into target.

(Click on image to enlarge)

DAX steadies around the 2023 high

• German factory orders rise 1%
• Fed Powell's next catalyst
• DAX re-enters rising channel

The dynamics are holding steady on Tuesday after gains in the previous session, as investors digest the latest German factory orders data and look ahead to Federal Reserve to pounds testimony before Congress.

German factory orders unexpectedly raised in January, 1% MoM, a slightly slower pace than the 3.4% games in February. However, this was above the below the -1% decline forecast. Helping to ease recession fears.

The data comes as ECB members increasingly point to interest rates in the region rising higher for longer to tame sticky inflation.

Attention now turns to Fed Chair Jerome Powell whose comments to Congress will likely drive sentiment in the afternoon session.
 

Where next for the DAX price?

After rebounding off lows at 15150, the DAX has pushed back above the 20 sma and back into the rising channel dating back to the start of the year to a 2023 high. This, combined with the RSI over 50, keeps buyers hopeful of further upside, bringing 15740, the February 2022 high into target ahead of the 16000 round number.

On the flip side, a break below the 20 sma at 15430 could open the door to 15140, the March low with a fall below here creating a lower low. Beyond here, 14900, the March 2022 high, and 14700 the June high come into focus.

(Click on image to enlarge)

More By This Author:

Two Trades To Watch: EUR/USD, USD/CAD - Monday, March 6
Two Trades To Watch: FTSE, Gold - Friday, March 3
Two Trades To Watch: EUR/GBP, Nasdaq - Thursday, March 2