Author: Sir Amar – Technical Analyst

The price of gold (XAU/USD) has rallied near a two-week low at $1832 after a move lower. The precious metal has recouped all of its intraday losses and may stage a bullish reverse trading session with open rejection after breaking Wednesday’s high of $1838. However, fundamentals continue to favour gold bears. The shiny metal underperformed on Tuesday as investors began to price in a highly aggressive tone from the Federal Reserve (Fed) in its June interest rate decision announcement. No one can deny that the spectre of inflation has wreaked havoc on homes.

Mounting price pressures are hurting their real earnings and a sudden meeting between Fed Chair Jerome Powell and US President Joe Biden has signalled loud and clear that the inflation spectre is real and will remain for a little longer. Before the dollar, the American dollar index (DXY) consolidates under 102.00, since investors expect the publication of the ISM Manufacturing PMI. The superior performance of the economical catalytic converter strengthens the DXY.

Gold has been mostly positive since hitting a more than three-month low of $1,786 an ounce on May 16, 2022. It is expected to record a second straight monthly decline for the first time since March 2021, with a drop of about 2.4% so far. The collapse of the Symmetrical Triangle on the hourly scale shows the dominance of the bears. The ascending triangle of the chart pattern discussed above is drawn from the May 20th low of $1832, while the descending trendline is drawn from the May 24th high of $1869. The widening gap to the exponential moving averages (EMAs) at $1841 and $1846 respectively will breathe fresh blood into dollar bulls and signal further downside.