Hot on the hills of the recent Cryptocurrency rout, this week, investors grappled with renewed fears of stagflation.
Fed Chair Powell reasserted the bank's resolve to fight inflation and further tighten its monetary policy, while not inspiring much confidence that it will not cause a recession in the process.
Sentiment took a nosedive on Wednesday, after retail giants in the US saw their bottom lines crushed by high inflation and costs, reigniting fears of stagflation. Things got ugly in Wall Street. with SPX500 posting its worst day in more than two years and the height of the pandemic.
The USDollar was not able to take advantage of these factors and XAU/USD is poised to end the four-week losing streak, trading at critical levels.
Yesterday it closed above the key 23.6% Fibonacci of the April High/May low drop and this can fuel a larger recovery to the 38.2% level (1,867). However, a catalyst will be required to surpass the broader 1,860-78) region, which is marked by the 4-Hour and the Daily EMAs and the upside contains many roadblocks.
The precious metal trades flat today and as long as it stays below these levels, risk is tilted to the downside. As such, it can come under renewed, although bears don't seem ready at this point to push below 1,780.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.