Gold Price Forecast: Bull’s eye $1,800 as US T-bond yields plummet as central banks cut stimulus


  • The Bank of Canada adds to the RBNZ as the only central banks that finished its pandemic QE.
  • US T-bond yields plunged once the BoC decision hit the wires.
  • Gold aims higher, as nervousness grows on investors, of what the Federal Reserve might do next.

Gold (XAU/USD) climbs during the New York session, is up 0.20%, trading at $1,796.47 a troy ounce at the time of writing. The non-yielding metal recovered some of its brightness as the session progressed, boosted by safe-haven flows.

Risk-off market sentiment spurred my month-end flows and US fiscal policy concerns, kept investors at bay. Furthermore, the economic growth outlook and central bank tightening monetary policy conditions seem to weigh on lately, hurting the greenback thus favoring gold.

In the meantime, the US T-bond yields plummet in the session, with the 10-year note breaking decisively below the 1.60% threshold, sitting at 1.535% down eight basis points, weighing on the greenback, as noted by the US Dollar Index falling 0.16%, at 93.79.

It is worth noting that on Wednesday, the Bank of Canada ended its weekly bond-purchasing program, that in turn, weighed on investors as yields plunged severely in the session.

That said, expectations around gold lie heavily on the Federal Reserve November meeting. A $15 Billion bond taper is priced in. However, If the Federal Reserve aims for a quicker than expected bond-tapering, that might send gold tumbling below the $1,720 threshold and potentially towards a renewed test of 2021 lows.

XAU/USD Price Forecast: Technical outlook

Daily chart

Gold (XAU/USD) spot price is above the confluence of the 100 and 200-day moving average (DMA) and on Tuesday broke a downward slope trendline previously resistance-turned-support, which could be viewed as a bullish signal. The Relative Strength Index (RSI) is at 58, aims slightly low, but as it remains above the 50-midline, it is bullish for the yellow metal.

To resume the upward trend, gold buyers will need a daily close above $1,800. In that outcome, the September 3 high at $1,834 would be the first resistance level. A clear break above the latter would expose the June 4 low at $1,855, followed by the $1,900 threshold.

XAU/USD TECHNICAL LEVELS TO WATCH

 

Overview
Today last price 1797.84
Today Daily Change 5.02
Today Daily Change % 0.28
Today daily open 1792.82
 
Trends
Daily SMA20 1770.62
Daily SMA50 1780.4
Daily SMA100 1790.16
Daily SMA200 1793.36
 
Levels
Previous Daily High 1808.36
Previous Daily Low 1782.43
Previous Weekly High 1813.82
Previous Weekly Low 1760.37
Previous Monthly High 1834.02
Previous Monthly Low 1721.71
Daily Fibonacci 38.2% 1792.34
Daily Fibonacci 61.8% 1798.45
Daily Pivot Point S1 1780.71
Daily Pivot Point S2 1768.61
Daily Pivot Point S3 1754.78
Daily Pivot Point R1 1806.64
Daily Pivot Point R2 1820.47
Daily Pivot Point R3 1832.57

 

 

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