Gold Price Forecast: XAU/USD bears seem unstoppable, target $1,900
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UNLOCK OFFER- Gold price hits a fresh one-week low near $1,910 early Tuesday.
- US Dollar tracks the US Treasury bond yields upsurge amid the hawkish Fed rate view.
- Gold price looks to test the $1,900 threshold amid a bearish daily technical setup.
Gold price is miring in one-week lows just above the $1,910 round figure early Tuesday. The United States Dollar (USD) continues to follow the US Treasury bond yields higher, weighing heavily on the non-yielding Gold price.
US Dollar, US Treasury bond yields dynamics to impact Gold price
The main underlying reasons for the relentless surge in the US Treasury bond yields are the US economic resilience and the Federal Reserve (Fed) policymakers’ ‘higher for longer’ interest rate view. Further, expectations that a budget deficit in the United States will be soon financed by borrowing also aided the ongoing upswing in the US Treasury bond yields to fresh sixteen-year highs.
Bloomberg reported on Tuesday, “Senate Republican And Democrat negotiators are nearing a deal on a short-term spending measure intended to keep the government open after October 1.” The benchmark 10-year US bond yields are up 0.50% on the day at fresh multi-year highs of 4.5690 while the US Dollar Index is sitting at a ten-month top of 106.10, as of writing. These factors have led to the second day of losses in the Gold price, which is considered a non-interest-bearing asset.
Adding to the upside in the US Dollar, the USD/JPY pair continues to march higher toward the 150.00, in the face of the monetary policy divergence between the Bank of Japan (BoJ) and the Fed. Looking ahead, should the Japanese authorities intervene in the forex (FX) markets to stem the Yen decline, the US Dollar could come under intense selling pressure alongside the USD/JPY pair, triggering a rebound in the Gold price.
However, the Japanese FX intervention doesn’t seem to be on the cards in the immediate term, although markets will continue to weigh the risks. Also, the focus will remain on the mid-tier United States CB Consumer Confidence and the New Home Sales data for fresh trading impetus. Speeches from several Fed policymakers will be also closely scrutinized along with the developments surrounding a US Senate deal to avert a government shutdown.
Gold price technical analysis: Daily chart
Having faced rejection once again at the critical support-turned-resistance at $1,926, where the 21- and 200-Daily Moving Averages (DMA) intersect, Gold price resumed the downside on Monday.
At the time of writing, Gold price is challenging the multi-day low near the $1,910 round figure. A sustained break below the latter will put the $1,900 threshold to test.
The 14-day Relative Strength Index (RSI) indicator is also pointing south while below the 50 level, suggesting that more downside remains on the cards for Gold price.
If the $1,900 support gives way, a fresh sell-off toward the August 21 low of $1,885 will be in the offing.
On the upside, a sustained break above the 21 and 200 DMA confluence of $1,926 is needed to prod the 50 DMA barrier at $1,928.
Recapturing the latter will prompt Gold buyers to target the downward-sloping 100 DMA at $1,940.
- Gold price hits a fresh one-week low near $1,910 early Tuesday.
- US Dollar tracks the US Treasury bond yields upsurge amid the hawkish Fed rate view.
- Gold price looks to test the $1,900 threshold amid a bearish daily technical setup.
Gold price is miring in one-week lows just above the $1,910 round figure early Tuesday. The United States Dollar (USD) continues to follow the US Treasury bond yields higher, weighing heavily on the non-yielding Gold price.
US Dollar, US Treasury bond yields dynamics to impact Gold price
The main underlying reasons for the relentless surge in the US Treasury bond yields are the US economic resilience and the Federal Reserve (Fed) policymakers’ ‘higher for longer’ interest rate view. Further, expectations that a budget deficit in the United States will be soon financed by borrowing also aided the ongoing upswing in the US Treasury bond yields to fresh sixteen-year highs.
Bloomberg reported on Tuesday, “Senate Republican And Democrat negotiators are nearing a deal on a short-term spending measure intended to keep the government open after October 1.” The benchmark 10-year US bond yields are up 0.50% on the day at fresh multi-year highs of 4.5690 while the US Dollar Index is sitting at a ten-month top of 106.10, as of writing. These factors have led to the second day of losses in the Gold price, which is considered a non-interest-bearing asset.
Adding to the upside in the US Dollar, the USD/JPY pair continues to march higher toward the 150.00, in the face of the monetary policy divergence between the Bank of Japan (BoJ) and the Fed. Looking ahead, should the Japanese authorities intervene in the forex (FX) markets to stem the Yen decline, the US Dollar could come under intense selling pressure alongside the USD/JPY pair, triggering a rebound in the Gold price.
However, the Japanese FX intervention doesn’t seem to be on the cards in the immediate term, although markets will continue to weigh the risks. Also, the focus will remain on the mid-tier United States CB Consumer Confidence and the New Home Sales data for fresh trading impetus. Speeches from several Fed policymakers will be also closely scrutinized along with the developments surrounding a US Senate deal to avert a government shutdown.
Gold price technical analysis: Daily chart
Having faced rejection once again at the critical support-turned-resistance at $1,926, where the 21- and 200-Daily Moving Averages (DMA) intersect, Gold price resumed the downside on Monday.
At the time of writing, Gold price is challenging the multi-day low near the $1,910 round figure. A sustained break below the latter will put the $1,900 threshold to test.
The 14-day Relative Strength Index (RSI) indicator is also pointing south while below the 50 level, suggesting that more downside remains on the cards for Gold price.
If the $1,900 support gives way, a fresh sell-off toward the August 21 low of $1,885 will be in the offing.
On the upside, a sustained break above the 21 and 200 DMA confluence of $1,926 is needed to prod the 50 DMA barrier at $1,928.
Recapturing the latter will prompt Gold buyers to target the downward-sloping 100 DMA at $1,940.
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