|

Gold Price Forecast: XAU/USD bears target $1,688 ahead of key US data – Confluence Detector

  • Gold price licks its wounds near monthly lows after testing the $1,700 mark.
  • US dollar rallies with yields as investors cheer hawkish Fed and ECB rate hike bets.
  • XAU/USD could extend losses towards $1,688 on a firm break below $1,700.    

Gold price is on a five-day downtrend, eyeing a sustained move below the $1,700 mark amid unrelenting buying interest seen around the US dollar. Markets seem to be convinced about a 75 bps Fed rate hike in September, reflective of the ongoing rally in the US Treasury yields across the curve. The two-year US rates are at their highest level since 2007 while the benchmark 10-year yields are at two-month highs above 3.20%. According to CME FedWatch Tool, there is a 72% probability of an outsized rate hike this month. Further, Eurozone inflation hit another record high at 9.1% in August, cementing a 75 bps Sept ECB rate hike. Expectations of aggressive tightening from the Fed and the ECB offset weak US ADP jobs data, weighing negatively on the non-yielding bullion. The bright metal now looks forward to the US ISM Manufacturing PMI and Nonfarm Payrolls data for fresh trading directives.

Also read: Gold Price Forecast: XAUUSD close to confirming a long-term double top

Gold Price: Key levels to watch

The Technical Confluence Detector shows that the gold price is gathering strength for the next push lower, as bears aim for the pivot point one-day S2 at $1,700.

If sellers find a strong foothold below the latter, a sharp sell-off towards the pivot point one-day S3 at $1,688 will be inevitable.

On the flip side, any recovery attempts will need acceptance above the convergence of the pivot point one-week S2 and the previous low four-hour at $1,707.

The previous day’s low of $1,710 will challenge the road to recovery, above which the Bollinger Band one-day Lower at $1,713 will come into play.

Further up, a dense cluster of resistance levels around $1,716 will be a tough nut to crack for bulls. That price zone is the confluence of the Fibonacci 38.2% one-day and SMA5 four-hour.

Here is how it looks on the tool

fxsoriginal

About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

Author

Dhwani Mehta

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.

More from Dhwani Mehta
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD falls toward 1.1700 on broad USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. The US Dollar gathers recovery momentum and forces the pair to stay on the back foor, as traders look to USD short-covering ahead of US inflation report on Thursday. However, the downside could be capped by hawkish ECB expectations. 

GBP/USD trades deep in red below 1.3350 after soft UK inflation data

GBP/USD stays under strong selling pressure midweek and trades below 1.3350. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board ahead of Thurday's BoE policy announcements. 

Gold clings to moderate daily gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps the pair hold its ground.

Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines

Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.

Monetary policy: Three central banks, three decisions, the same caution

While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week. 

Crypto Today: Bitcoin, Ethereum, XRP slide further as risk-off sentiment deepens

Bitcoin faces extended pressure as institutional investors reduce their risk exposure. Ethereum’s upside capped at $3,000, weighed down by ETF outflows and bearish signals. XRP slides toward November’s support at $1.82 despite mild ETF inflows.