GOLD Price Analysis – February 23, 2023

Daily Price Outlook

The XAU/USD pair is currently trading at approximately $1,820, and following the recent release of the Federal Open Market Committee (FOMC) meeting minutes, the price of gold has entered a downward trend, experiencing a sell-off.

Investors are closely monitoring the market for any potential signs of economic recovery, which could further impact the price of gold. While the XAU/USD pair has experienced a recent decline, it remains to be seen how future economic developments will shape its trajectory.

As the market continues to evolve, it will be important to keep a close eye on any shifts in the XAU/USD pair's price, as well as any relevant market indicators or economic data that could impact its movement.

US Dollar Strengthens

The US dollar has strengthened recently as a result of positive economic reports indicating the strength of the American economy. The US Dollar Index (DXY) has increased to $104.52.

Expectations of a 50 basis point rate hike have also contributed to the dollar's rise, although the US Treasury Yield has remained relatively stable. The US 10-Year Treasury is currently at 3.92%, down 0.003 in the past 24 hours.

The Federal Reserve's comments about the possibility of rising interest rates have increased the opportunity cost of owning gold, which is a non-yielding asset. As a result, the price of gold has been affected, with recent news of the FOMC minutes accelerating a sell-off and causing the gold price to trend downward.

Fed Meeting Minutes Show Hawkish Stance

The Federal Reserve released the minutes of its latest Monetary Policy Meeting on February 22, revealing that all participants agreed that more rate increases are necessary to meet the inflation target.

According to Federal Reserve Bank of New York President John Williams, the Fed is committed to achieving a 2% inflation rate in the coming years. The hawkish Fed minutes were further strengthened by comments indicating that some participants supported a 50 basis point rate hike and that some members believed a recession could occur in 2023.

The likelihood of prolonged rate increases, as indicated by the hawkish Fed minutes, is putting pressure on the price of gold.

China and Russia Strengthen Strategic Partnership Amid Geopolitical Concerns

Wang Yi, China's top diplomat, met with Vladimir Putin in Moscow to reinforce the close ties between the two countries just before the one-year anniversary of the start of the Ukrainian War. Wang Yi declared they were prepared to strengthen their strategic partnership with Russia and stated that their relations would not suffer from pressure from outside nations. Putin emphasized the importance of working together with China and expressed optimism about Xi Jinping's visit to Moscow.

Geopolitical tensions over China and Russia have heightened, causing a rush to safety and boosting the US Dollar while weighing down on XAU/USD.

Gold (XAU/USD) Intraday Technical Levels

Support      Resistance

1817           1840

1809           1854

1795           1862

Pivot Point: 1832

Gold (XAU/USD) – Technical Outlook

On Thursday, gold bounced off the support level of $1,820 and formed a bullish engulfing candle, indicating a bullish bias. The immediate resistance for gold is at the $1,835 or $1,845 marks, levels that are extended by a double top pattern.

Although the RSI and MACD indicators are still in the sell zone, the MACD is forming smaller histograms, indicating a weaker selling bias. Additionally, the 50-day simple moving average is around $1,835, which may act as a hurdle to the upside.

Market participants are closely watching the US GDP figures, which are due to come out at 1:30 pm (GMT) today. Strong US GDP figures typically weigh on gold prices.

Related:

    * EUR/USD Analysis – February 23, 2023