Gold Struggles to Break Above 21-Day SMA Amid Fed Hike Expectations
The price of gold has been struggling to break above its 21-day Simple Moving Average (SMA), currently at $4,066.82 per ounce, as bearish technical indicators outweigh bullish fundamental factors.
The metal's decline is attributed to persistent expectations of a US Federal Reserve interest rate hike in September, with markets pricing in a 65% chance of such a move, according to the CME Group's FedWatch Tool.
However, broad-based US Dollar weakness, fueled by the USD/JPY sell-off and hopes of US-Iran diplomatic efforts, is capping further downside for gold.
Analysts at Commerzbank argue that the macro backdrop remains a headwind for bullion, with 'persistent expectation of Fed interest rate rises' likely to 'counteract any rise in the gold price.'