The fall in U.S. government bond yields and greenback dollar trading has made gold prices rise higher in the European session until the start of the New York session on Wednesday’s trading.
This situation has given renewed hope to gold investors to expect the yellow metal to return to higher levels again to end the bearish pattern earlier in the week.
Even so, the increase failed to continue after the gold movement was affected by a statement by Federal Reserve (Fed) Chairman Jerome Powell who said the central bank was committed to reducing high inflation by raising interest rates at an appropriate rate.
If the interest rate hike continues with a few policy meetings remaining until the end of the year, it is expected that the US dollar has the potential to continue to strengthen against other major currencies in the market.
On the XAU/USD price chart which measures the value of gold against the US dollar yesterday, the gold surge came as a surprise to investors seeing the declining price hit around 1824.00 again making a rebound past 1830.00 and reaching a high of 1847.00.
But at the end of the New York session, the price started to decline again to close the trade around the 1838.00 level.
Even so, investors are still optimistic expecting the rise in gold prices to continue again today as the price remains hovering above the Moving Average 50 (MA50) support level on the 1 -hour time frame for a bullish signal for gold.
If gold manages to maintain the bullish momentum today, the price will head back to the resistance zone at 1850.00 to overcome the high reached on yesterday’s surge.
Further price increases that pass the resistance zone will lead to the target level of 1870.00, which is the price resistance zone tested in the previous few weeks' trade that has not been broken.
On the other hand, if the price declines again below the 1830.00 zone, it is seen that the gold price will head around the 1810.00 level first before the lower decline will reach the main support zone at 1800.00 for the price to test the zone.
