Gold Price Forecast: XAU/USD cheers China-led risk-on mood on the way to $1,800, focus on Fed


  • Gold retreats after two-day uptrend sidelined of late.
  • Hopes that China will save Evergrande, US debt limit expiry will be extended favor buyers.
  • Fed tapering concerns, geopolitical fears keep sellers hopeful ahead of multiple resistances.
  • Gold Price Forecast: Further advances depend on the Fed

Update: Gold (XAU/USD) regains upside momentum after a sluggish start to the key day. That said, the yellow metal rises for the fourth consecutive day, up 0.10% around $1,776 during early Wednesday.

Although the pre-Fed cautious challenged gold buyers earlier in Asia, China’s heavy liquidity injection and Evergrande news suggesting the ability to pay coupons on expiry recently favored the risk-on mood, also the metal prices.

Earlier in the day, the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath also sounded optimistic over China’s ability to tame the fears emanating from the real-estate firm.  On the same line were hopes of the extension to the US debt limit expiry the House votes 217-207 to favor temporary government funding and debt limit increase debate.

While headlines concerning China and Evergrande may entertain gold traders, markets may witness sluggish moves ahead of the Fed decision.

End of update.

Gold (XAU/USD) bulls take a breather around $1,775, following a three-day uptrend during the key Wednesday’s Asian session. In doing so, the metal fades bounce off the mid-August levels while trading sideways of late.

Markets turn cautious, mostly inactive, as the Federal Reserve (Fed) prepares for the Federal Open Market Committee (FOMC) monetary policy meeting announcement. Recently mixed data contrasts the Fed policymakers’ hawkish bias to confuse traders. Goldman Sachs recently backed the Fed tapering announcement and challenged the gold buyers. On the same line could be firmer US housing market data, namely Housing Starts and Building Permits for August, which backed hopes of hearing the word taper from the US Fed in Wednesday’s meeting.

Also important is the return of China after a long weekend amid chatters that the dragon nation will save its biggest real-estate player. Evergrande Chairman and the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath also sound optimistic in his latest speech and supported the brighter concerns.

It’s worth noting that the UK, Australia and US securities pact, followed by Bloomberg’s news stating that the European Union (EU) and the US aim to pledge more enforcement to curb China risk, add to the market’s fears and weigh on gold prices.

Also previously adding to the risk-on mood were the hopes of stimulus, as hinted by House Speaker Nancy Pelosi, as well as the US Democratic Party’s push to suspend the debt ceiling. Recently, the US House votes 217-207 to favor temporary government funding and debt limit increase debate.

While portraying the mood, US equities closed mixed while the 10-year Treasury yields rose 1.9 basis points (bps) to 1.328% by the end of Tuesday’s North American session. That said, S&P 500 Futures drop 0.25% by the press time whereas US Dollar Index (DXY) also portrayed the sluggish mood while keeping the previous day’s pullback from the monthly top on Tuesday.

Moving on, monetary policy decisions from the People’s Bank of China (PBOC) and the Bank of Japan (BOJ) may entertain gold traders, as well as chatters relating to Evergrande. However, the Fed decision will be crucial for gold traders. Should the US central bank hint at tapering, gold prices may have to bear the burden of the likely US dollar upside.

Read: Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot

Technical analysis

Gold retreats from the monthly horizontal hurdle, following a three-day rebound from the lowest levels in six weeks.

Not only a failure to cross the horizontal area from late August, around $1,780-82, but bearish MACD signals also keep gold sellers hopeful.

Even if the metal crosses the $1,782 hurdle, a downward sloping trend line from September 03, near $1,789, precedes a convergence of 20 and 50 DMAs close to $1,795 to challenge the gold bulls.

Additionally, 200-DMA and the famous double tops, respectively around $1,807 and $1,834, act as extra hurdles to the north.

On the contrary, the latest swing lows around $1,742 and August 10 bottom close to $1,717 may lure the gold sellers during fresh downside.

However, the $1,700 threshold and the yearly low of $1,687 may restrict the metal’s weakness afterward.

Overall, gold had many challenges to sustain before convincing the bulls.

Gold: Daily chart

Trend: Pullback expected

XAU/USD

Overview
Today last price 1774.7
Today Daily Change 10.50
Today Daily Change % 0.60
Today daily open 1764.2
 
Trends
Daily SMA20 1796.65
Daily SMA50 1795.34
Daily SMA100 1815.66
Daily SMA200 1807.5
 
Levels
Previous Daily High 1767.12
Previous Daily Low 1742.3
Previous Weekly High 1808.67
Previous Weekly Low 1745.39
Previous Monthly High 1831.81
Previous Monthly Low 1687.78
Daily Fibonacci 38.2% 1757.64
Daily Fibonacci 61.8% 1751.78
Daily Pivot Point S1 1748.63
Daily Pivot Point S2 1733.05
Daily Pivot Point S3 1723.81
Daily Pivot Point R1 1773.45
Daily Pivot Point R2 1782.69
Daily Pivot Point R3 1798.27

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD remains vulnerable near 1.1600 amid firmer dollar

EUR/USD is hovering around 1.1600, on the defensive amid a broadly stronger US dollar. Markets cheer US-Sino talks and stimulus progress despite looming inflation fears. The Fed-ECB monetary policy divergence weighs down on the euro. US Consumer Confidence data awaited.

EUR/USD News

GBP/USD hovers around 1.3750, Brexit talks in London eyed

GBP/USD is trading above 1.3750, struggling for a clear direction after Monday’s rebound. Market sentiment improves on stimulus hopes, US-Sino talks but the dollar remains firmer. UK’s Frost offers EU Dec deadline to solve the row over the NI proposal. All eyes on the Brexit talks.

GBP/USD News

XAU/USD flirts with $1,800 amid stronger USD, risk-on mood

Gold snaps a five-day uptrend, refreshes intraday low of late. Market sentiment dwindles amid pre-GDP caution, light calendar. US Treasury yields rebound, add strength to the greenback.

Gold News

Traders book profits from Shiba Inu to push Dogecoin to $0.34

Dogecoin price could see some incoming speculative money from profit-taking in Shiba Inu A bullish close above the Cloud on the daily chart indicates future upswing likely. The outperformance of Shiba Inu is likely as Dogecoin lags the majority of the market.

Read more

Conference Board Consumer Confidence October Preview: Watch what we do... Premium

Confidence expected to slip to 108.3 from 109.3 in September. Michigan Consumer Sentiment eroded slightly in October. Sentiment seems divorced from labor market and Retail Sales. Federal Reserve taper will not hinge on a happy US consumer.

Read more

Forex MAJORS

Cryptocurrencies

Signatures