Gold Price Forecast: 21-DMA limits XAU/USD’s bullish potential ahead of Fed minutes

Gold price battles 21-DMA as falling Treasury yields counter DXY’s strength.
Fed minutes could pour cold water on the central bank’s hawkish turn.
100-DMA will continue capping the downside, as bulls crave for more gains.

Dhwani Mehta FXStreet

With the return of full markets, bulls flexed their muscles and drove gold price to the highest level since June 17 at $1815. Gold, however, failed to sustain at higher levels and pulled back sharply to finish the day below the $1800 level. Delta covid flareups combined with discouraging German ZEW Survey and US ISM Services PMI re-ignited concerns over the global economic recovery, which boosted the safe-haven flows into the US dollar and Treasuries. As risk-aversion swept off markets amid economic concerns and China’s technology sector crackdown, the US Treasury yields tumbled alongside the global stocks and boosted gold’s appeal. However, the unbeatable strength in the US dollar capped the gold’s upside.

Heading into the FOMC minutes showdown, gold price is once again testing bullish commitments above $1800, as the persistent weakness in the US rates and cautious market mood continue to underpin. Further, the US dollar’s modest retreat from overnight highs also helps revive the upbeat momentum in gold price. The next direction for gold depends on the Fed’s June meeting’s minutes dropping in at 1800 GMT later on Wednesday, which could disappoint the hawks, especially after the world’s powerful central bank delivered a hawkish surprise at its policy meeting last month. In the meantime, the broader market sentiment and covid updates will likely influence gold’s price action.

Gold Price Chart - Technical outlook

Gold: Daily chart

Technically, gold price still faces an uphill task to extend its break above $1800 with conviction, as the 14-day Relative Strength Index (RSI) continues to trend below the central line even though it is pointing northwards.

Therefore, daily closing above $1800 is critical to confirm a bullish reversal. The 21-Daily Moving Average (DMA) at $1804 offers immediate resistance.

A firm break above that level will call for a retest of the three-week highs of $1815. The next relevant upside hurdle is aligned around the $1830 level, where the 50 and 200-DMA close in.

On the flip side, the previous crucial resistance now support of 100-DMA at $1789 could limit any retracement. So long as this level holds, the bulls remain hopeful for further upside.

The next relevant cushion for gold bulls is seen at Monday’s low of $1785, below which the $1780 round figure could be brought back into play.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.