Spot gold prices fell on Wednesday amid a stronger US dollar. As of 1320 hours GMT, gold in the international market was available at $1,896 per ounce, shedding $9.70 (-0.51 percent). Out of the $9.70 per ounce decrease, -$12.40 was due to strengthening of the US dollar and +$2.70 was due to predominant buyers, according to Kitco Gold Index. The price of 10 grams of 24-carat yellow metal in Pakistan, meanwhile, decreased to Rs113,200 after shedding Rs500. Gold price in the local market settled at Rs113,700 on Tuesday last. According to experts, the bearish potential remains intact for gold, as the US dollar holds near two-year highs versus its main rivals. They said that gold is attempting a rebound from two-month lows of $1,886. The market mood remains upbeat despite the ongoing EU-Russia energy conflict, in the face of the Ukraine war.
They said the US dollar is pulling back from two-year highs amid the improving sentiment, offering a much-needed respite to gold bulls. The negative sentiment seen around the US Treasury yields also aided the rebound in the non-yielding gold price. Persistent concerns over global growth, China’s lockdowns and more aggressive Federal Reserve rate hikes are likely to keep the demand for the greenback intact, which could limit gold’s rebound.
From a technical perspective, gold price breached the March 29 lows of $1,890 but found bids just above the end-of-February lows near $1,880. Even though gold bounced back towards the $1,900 mark, the 14-day Relative Strength Index (RSI) keeps pointing lower below the midline, suggesting that any recovery attempts are likely to remain shallow.
If bulls succeed in recapturing $1,900 on a sustained basis, then Tuesday’s high of $1,911 could be retested. Further up, the $1,950 psychological level will be closely followed by gold bulls.
On the downside, only a daily closing below the $1,890 support could initiate a fresh downswing towards the February 24 lows of $1,878. Sustained weakness below the latter will expose the rising 100-Daily Moving Average (DMA) at $1,875.