Heading into the Fed’s July meeting’s minutes release, gold is witnessing a buying resurgence, as the bulls look to reclaim the $1800 mark. In the view of FXStreet’s Dhwani Mehta, the yellow metal is set to breakout to the upside. The FOMC minutes will throw fresh light on the US central bank’s tapering plans. Escalating covid concerns continue to remain an upside risk for gold price, as they bring along a lot of uncertainty on the prospects of global economic recovery.
The dollar is easing ahead of the key event risk amid a minor recovery in the risk sentiment, which has fuelled the gains in gold price (for now). If the risk aversion seeps back in the sessions ahead, the safe-haven dollar could catch a fresh bid and dent’s gold’s bullish potential.
The horizontal 200-SMA at $1796 appears a tough nut to crack for gold bulls while the immediate downside remains capped by the horizontal 100-SMA at $1786. The Fed minutes could yield a breakout in either direction. However, with the Relative Strength Index (RSI) edging higher above the midline, the risks remain skewed towards an upside breakout.
The 200-Daily Moving Average (DMA) at $1813 could be next on the buyers’ radar. Therefore, a four-hourly closing above the 200-SMA could call for a test of the $1800 mark. Any dip below the 100-SMA could expose the bullish 21-SMA at $1780, below which the last line of defense appears at the downward-sloping 100-SMA at $1759.