Gold Price Forecast: XAU/USD bears eye a run below trendline support

Gold Price is pressured and taking on a critical micro trend line.
This leaves the bias on the downside while below $1,780/00 and a break of $1,702 open risk to $1,670.

Ross J Burland FXStreet

The Gold Price is consolidated towards the lows of the US session range near $1,777.00. XAU/USD fell from a high of $1,808 to a low of $1,774 on Thursday due to a stronger US Dollar.

''Gold fell amid the decline in investor demand,'' analysts at ANZ Bank said. ''Nevertheless, the global economy is at an inflection point. Tighter monetary policies amid high inflation are likely to slow economic growth in 2023. This backdrop is typically positive for gold,'' the analysts argued.

''Synchronised rate hikes have weighed on gold in 2022. Although we expect the US fed funds rate to peak at 5%, a pause in rate hiking should turn market sentiment in favour of gold,'' the analysts forecast.

Fed sentiment weighs

On Wednesday, the Federal Reserve projected continued rate hikes to above 5% in 2023, a level not seen since a steep economic downturn in 2007. Due to the hawkish rate hike, investor fears have intensified that the Federal Reserve's battle against inflation using aggressive interest rate hikes could lead to a recession. This has filled a bid into the US Dollar. However, the analysts at ANZ Bank argue that ''we approach the end of US Dollar dominance, and a depreciation in the currency would add further support to investor demand.''

''With the Fed suggesting rates will remain high through 2023, the risk of weak economic growth next year. Gold prices tend to come under pressure ahead of recessions, but then outperform other markets (such as equities) during them,'' the analysts argued.

On the flip side, analysts at TD Securities expect gold prices to be weighed down by trend follower short acquisitions, ''with prices already flirting with key triggers for several subsequent selling programs just below the $1785/oz mark. In turn, the bar is low for CTAs to add 7% of their maximum historical length to their short position in the yellow metal.''

Gold technical analysis

The price is on the backside of the bearish cycle and has been advancing through the various resistances higher in a short squeeze. If the bulls can get a close above $1,800, then there will be prospects for a continuation towards $1,850 and $1,880.

On the other hand, as illustrated below, zoomed in on the daily chart, the micro trendline was broken in today's bearish impulse. This leaves the bias on the downside while below $1,780/00 and a break of $1,702 open risk to $1,670:

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD remains offered; supported by 0.7100

AUD/USD adds to Monday’s retracement, although it manages well to keep the trade above the 0.7100 yardstick ahead of the opening bell in Asia. Once again, the softer tone in spot follows decent gains in the Greenback amid rising bets for a Fed rate hike on Wednesday.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold set to fall toward $4,000 as Warsh faces a Fed rate-hike dilemma

As the Federal Reserve monetary policy announcement approaches and the Middle East war intensifies, the US Dollar resumes its advance. Gold price posted a tepid attempt to recover its shine in early August, but with renewed USD demand, the bright metal faltered miserably and is now closer to the $4,000 mark than the encouraging $4,700 peak from a month ago.

Bitcoin pulls back as valuation ceilings hold while XAU weakness persists

Bitcoin (BTC) corrects alongside the broader cryptocurrency market on Tuesday as selling persists ahead of the United States (US) Federal Reserve (Fed) monetary policy decision. Market participants expect the central bank to raise interest rates to 3.75%-4.00% on Wednesday, potentially weighing on risk assets.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.

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.