Gold price (XAU/USD) shows extremely volatile action around $1,930.00 as Federal Reserve (Fed) chair Jerome Powell has sounded hawkish while delivering testimony in front of Congress. The precious metal defends the $1,930.00 despite Fed Powell confirming more rate hikes this year.
S&P500 futures have extended losses further as investors are hoping that expectations of more interest rate hikes from the Federal Reserve (Fed) have pushed the United States economy toward recession. The US Dollar Index (DXY) shows volatile spikes but is still inside the woods, around 102.60. The 10-year US Treasury yields seem choppy, around 3.75%.
Fed Powell has confirmed that policymakers favor further interest rate hikes this year as the process of getting inflation back down to 2% has a long way to go. The Fed believes tight credit conditions are expected to pressure economic activities, inflation, and labor market conditions. However, the extent remains uncertain.
Chances of a recession in the United States economy are well solid as more interest rates by the Fed would impact the scales of manufacturing and service activities.
Jerome Powell has confirmed that the central bank will be data-dependent, and long-term consumer inflation expectations are well-anchored.
Gold Technical Analysis
Gold price is on the edge of the horizontal support of the Descending Triangle chart pattern formed on a two-hour scale, which is placed from the May 30 low at $1,932.12. The downward-sloping trendline of the chart above design is plotted from June 02 high at $1,983.00. The 200-period Exponential Moving Average (EMA) at $1,958.84 acts as a barricade for the Gold bulls. Horizontal resistance is plotted from May 05 low around $2,000.00.
The Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which indicates that the downside momentum has been triggered.