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Gold surges to a 3-month high after Powell’s dovish rate hike comments

Gold surges to a 3-month high after Powell's dovish rate hike comments

The bulls in the gold market have stepped on the gas in response to comments made by the Federal Reserve Chairman Jerome Powell, who took a dovish stance towards U.S. monetary policy.

As a result of Powell’s comments on Wednesday, November 30, there has been a steep decline in the value of the U.S. dollar index, prices for crude oil have increased noticeably, and yields on U.S. government bonds have fallen. Kitco analyst Jim Wyckoff commented on December 1 that these are “all bullish ‘outside market’ elements that are also boosting precious metals markets.” 

This week saw a notable shift toward a more positive near-term technical position for gold, reaching a high last seen in mid-August. On the daily charts, there is an uptrend in price movement for the metal, which indicates that more price action ranging from sideways to higher is probable in the near future.+

24-hour gold spot price. Source: Kitco

Gold technical analysis

The daily chart demonstrates that prices are increasing above the 200-day simple moving average. It is doing so at a very early stage in the momentum swing.

24-hour spot price with 200-day SMA. Source: TradingView

The stochastic RSI has just emerged from an oversold state while also producing a higher low for the time being.

Gold’s technical analysis (T.A.) indicators on 1-day gauges remain bullish, as their summary stands in the ‘strong buy’ position at 15, as opposed to 0 indicating ‘sell’ and 10 pointing towards ‘neutral.’

This summary is taken from moving averages (M.A.), which are also firmly in ‘strong buy’ at 13, whereas they and ‘neutral’ at 1, respectively. On the other hand, oscillators stand in the ‘buy’ zone at 2, as opposed to 9 in ‘neutral’ and  ‘sell’ with 0.

24-hour gold technical gauges. Source: TradingView

Gold may climb higher after employment data

Notably, on November 28, gold’s price weakened as USDX moved up from its daily low and on-demand worries amid unrest in China. However, this morning’s (December 1) reading on personal consumption expenditures (PCE) came in lower than expected 5%, providing credibility to the dovish comments that Jerome Powell offered yesterday afternoon, as gold prices held momentarily major gains above $1,800.

Investors should prepare themselves for the possibility that the upward momentum swings in gold may pick up speed in the event that Friday’s employment data is less than expected.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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