Gold Price Forecast: XAU/USD looks south as US dollar cheers stimulus gloom

Gold tracked stocks lower on Tuesday after Trump rejected stimulus talks.
Trump’s latest call for partial stimulus lent some support, but not for long.
Technical indicators favor the bears ahead of Fedspeak, FOMC minutes.

Dhwani Mehta FXStreet

The latest tweet from US President Donald Trump on stimulus early Wednesday saved the day for the gold bulls, as Gold (XAU/USD) attempts a tepid bounce from weekly lows of $1874. Trump called on for partial stimulus, urging Congress to approve paycheck protection and airline support. The sentiment received a fresh lift propping the Asian equities while the US dollar stalled its overnight rally.

Despite gold’s pullback, the path of least resistance remains to the downside, as the safe-haven dollar will likely remain in demand amid fresh concerns on the US economic recovery, in the wake of no prospects of fiscal stimulus until after the US elections. Also, markets would favor the US currency ahead of the Fedspeak and FOMC minutes, keeping the gold bulls at bay.

Late Tuesday, President Trump rejected House Speaker Nancy Pelosi’s $2.4 trillion fiscal aid offer, which triggered a fresh risk-aversion wave across the financial markets. Gold tumbled in tandem with the Wall Street stocks amid resurgent demand for the greenback, as a safe-bet.

Gold: Short-tern technical outlook

Hourly chart

Looking at gold’s hourly chart, the price seems struggling to extend the recovery momentum from weekly lows, with the immediate upside barrier seen at horizontal 200-hourly Simple Moving Average (HMA), currently at $1890.

Acceptance above the latter would expose the bearish 21-HMA at $1895. The next critical resistance awaits at $1902, the confluence of the 50 and 100-HMAs.

Alternatively, a failure to defend the weekly lows of $1873, the next robust support at $1860 will be put to test, which is the 100-day Simple Moving Average (DMA).

The hourly Relative Strength Index (RSI) trades flat around 33.40, after bouncing from the oversold territory, suggesting that there is more scope to the downside.

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 climbs toward 0.7000 after strong China data dump

AUD/USD attracts follow-through buyers for the second straight day on Monday, extending last week's recovery toward 0.7000 in Monday's Asian trading. Strong Chniese Q3 GDP and activity data for September strengthen the pair's advance, following RBA Assistant Governor Chris Kent's hawkish remarks.

USD/JPY struggles near 158.00 amid hawkish BoJ, subdued USD

USD/JPY remains defensive near 158.00 in the Asian session on Monday, as the US Dollar remains depressed near a two-week low amid the recent decline in US bond yields. Furthermore, looming intervention risks underpin the Japanese Yen and weigh on the pair amid BoJ Governor Kazuo Ueda's hawkish remarks. However, Fed rate-hike bets and geopolitical uncertainties could limit USD losses and the major.

Gold drops to daily lows below $4,150

Gold builds on Friday’s retracement and slips back below the $4,150 mark per troy ounce on Monday. The better tone in the US Dollar and a decent bounce in US Treasury yields across the curve keep the yellow metal under pressure for now.

Crypto Today: Bitcoin, Ethereum, XRP extend recovery despite ETFs outflows

Bitcoin edges higher above $82,000, building strong structural support despite roughly $229 million in ETF outflows last week. Ethereum recovers above $2,400 as bulls strive to regain trend control, backed by a subtle recovery in momentum indicators.

Higher than expected inflation shakes markets: What to prepare for?

US CPI report came in stronger than expected, lifting the probability of a December rate hike higher once again. Even though Fed Chair Warsh reinforced expectations of a hold for the October’s meeting, markets now face a two-step event: a likely pause on October 28, followed by an interest rate hike on December 9.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.