Precious metal gold surged dramatically from 1390 to 1407 level on dovish remarks from the Federal Reserve Chairman Jerome Powell.
Fed Chair Signals Rate Cut
The U.S. dollar slipped right after Fed Powell hit a downbeat tone in his testimony, stating trade uncertainties and concerns about the global outlook continued to exert pressure on the U.S. economy.
Consequently, the greenback placed session lows against the euro and Japanese yen after Powell’s comments. At the same time, we saw a sharp bullish price action in gold prices. The chairman of the Federal Reserve has bonded the case for the US central bank to lower interest rates based on ascending risks to the US economic outlook, in dovish testimony to Congress that stoked sentiments for a rate cut this month.
Now that’s something which was highly unexpected from Jay Powell, especially after having a strong labor market report this month. Whereas, the recent truce in the trade war between the US and China also help driving the hawkish remarks.
Gold – Technical Outlook
On the hourly timeframe, the precious metal gold has violated the descending triangle pattern on the upper side. The pattern was extending solid support around 1386 along with resistance at 1407.
Zooming out on the hourly chart, we can see a sharp bullish crossover on 20, and 50 periods EMA, which signifies bullish bias among investors.
For now, gold is likely to face strong resistance at 1410, and the bullish breakout of this level can extend buying until 1424. While the support stays around 1400 today. All the best!