Gold Price Forecast: XAU/USD reconquers $2,400, lacks directional momentum

Valeria Bednarik FXStreet

XAU/USD Current price: $2,404.79

Key earnings reports and upcoming US first-tier events push investors to the sidelines.
Treasury yields shed some ground, weighing on the US Dollar.
XAU/USD bounced back, but additional gains in the near term seem unlikely.

Spot Gold recovered on Tuesday, changing hands at $2,403 a troy ounce. XAU/USD bounced from a weekly low of $2,383.78 posted on Monday as demand for the US Dollar receded ahead of United States (US) first-tier data and key earnings reports. Nevertheless, market participants are increasing their bets that the Federal Reserve (Fed) will deliver a 25 basis point (bps) interest rate cut in September and a similar one in December, also limiting the USD bullish potential.

Finally, easing government bond yields undermines demand for the Greenback. The 10-year Treasury note currently offers 4.23%, while the 2-year note yields 4.49%, down roughly 3 bps each.

A scarce macroeconomic calendar and upcoming US first-tier events further exacerbate the lack of clear directional strength. Investors are waiting for the preliminary estimate of the Q2 Gross Domestic Product (GDP) to be out on Friday, alongside revisions for the Personal Consumption Expenditures (PCE) Price Index in the same period, the Fed’s favourite inflation gauge. Furthermore, the country will release the June PCE inflation data on Friday, which will have a lesser impact than usual but will still affect the USD.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it is bouncing from the 50% Fibonacci retracement of the $2,293.54/$2,483.68 rally at $2,389.30. At the same time, a bullish 20 Simple Moving Average (SMA) heads higher just below the mentioned Fibonacci level, while the longer ones also advance below the longer ones, in line with the dominant bullish trend. Finally, the Momentum indicator maintains its downward slope within positive levels, while the Relative Strength Index (RSI) has turned marginally higher at around 54, supporting another leg higher.

In the near term, and according to the 4-hour chart, an upward extension seems limited. XAU/USD topped around the 38.2% retracement of the mentioned rally, providing statict resistance at $2,411.25. Furthermore, a bearish 20 SMA converges with the Fibonacci level, reinforcing it. Meanwhile, the Momentum indicator aims north at around its 100 line, while the RSI indicator remains directionless at 42.

Support levels: 2,389.30 2,377.10 2,364.00

Resistance levels: 2,411.25 2,425.70 2,439.90

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD remains depressed 0.7000, awaits FOMC Minutes

AUD/USD struggles to capitalize on its recent recovery move and trades with a negative bias below 0.7000 in Wednesday's Asian session. Amid geopolitical uncertainty, the US Dollar attracts some dip-buyers after a fresh leg up in US bond yields, keeping the pair under pressure despite hawkish RBA expectations. All eyes now remain on the FOMC Minutes.

USD/JPY holds firm near 158.50 ahead of Fed Minutes

USD/JPY hangs close to a one-and-a-half-week high near 158.50 in the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle before positioning for further gains ahead of the FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties, boosting the pair amid dovish BoJ commentary.

Gold trims losses, back above $4,100

Gold now manages to regain some balance, returning to the area above the key $4,100 mark per troy ounce following the closing bell in Europe on Wednesday. The yellow metal’s sharp pullback comes in tandem with marked gains in the US Dollar and a marked bounce in US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum and XRP fall liquidating $550M

Bitcoin’s correction follows a recent rejection due to supply around $87,200. Altcoins are generally in a correction trend, as Ethereum edges lower toward the next key support at $2,600 and Ripple extends its down leg near the $1.45 demand area.

Fed Minutes set to provide some insight into the timing of next rate hikes

The United States (US) Federal Reserve (Fed) will release the Minutes of September’s Federal Open Market Committee (FOMC) meeting on Wednesday. Investors are eager for some details that shed light on the extent and the timing of the central bank´s tightening cycle after approving the first interest rate hike in three years in September.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.