Gold Price Forecast: XAU/USD drops to nearly one-month low amid sustained US Dollar buying


  • Gold price continues losing ground for the third straight day and drops to a nearly one-month low.
  • A combination of factors continues to boost the US Dollar and drive flows away from the XAU/USD.
  • Worries about a global economic slowdown could lend some support to the safe-haven commodity.

Gold price drifts lower for the third successive day - also marking the sixth day of a negative move in the previous seven - and drops to a nearly one-month low during the first half of the European session. The XAU/USD currently trades just above the $1,970 level, down nearly 0.50% for the day, and is pressured by a combination of factors.

Sustained US Dollar buying continues to weigh on Gold price

The US Dollar (USD) prolongs its recent uptrend witnessed over the past two weeks or so and touches a fresh high since March 24, which, in turn, is seen driving flows away from the US Dollar-denominated Gold price. Against the backdrop of speculations that the Federal Reserve (Fed) will keep interest rates higher for longer, the optimism over the potential lifting of the debt ceiling in the United States (US) remains supportive of elevated US Treasury bond yields and underpins the USD.

US debt ceiling optimism further undermines the safe-haven XAU/USD

It is worth recalling that the recent hawkish comments by several Fed officials pushed back against market expectations for rate cuts later this year. Furthermore, US President Joe Biden and top congressional Republican Kevin McCarthy underscored their determination to strike a deal soon to raise the government's $31.4 trillion debt ceiling. This helps calm fears of an unprecedented American debt default and boosts investors' confidence, which further weighs on the safe-haven Gold price.

Looming recession fears could lend some support to Gold price

Market participants, however, remain worried about slowing global growth, particularly in China, which could lend support to the XAU/USD and help limit deeper losses, at least for the time being. Traders might also refrain from placing aggressive bets ahead of Fed Chair Jerome Powell's appearance on Friday. Investors will look for fresh clues about the US central bank's near-term policy outlook, which should help determine the next leg of a directional move for the Gold price.

Thursday’s US macro data and Fed speaks eyed for fresh impetus

In the meantime, traders will look to Thursday's US economic docket, featuring the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales, for some impetus. Apart from this, scheduled speeches by Fed members, the US bond yields and the US debt-limit negotiations will influence the USD price dynamics. This, along with the broader risk sentiment, could produce short-term trading opportunities around the Gold price.

Gold price technical outlook

From a technical perspective, some follow-through selling below the $1,970 horizontal support might be seen as a fresh trigger for bearish traders. This could make the Gold price vulnerable to prolonging its recent corrective pullback from the all-time high, around the $2,078-$2,079 area touched earlier this month. The XAU/USD might then accelerate the fall towards testing the 100-day Simple Moving Average (SMA), currently pegged near the $1,925 region, with some intermediate support near the $1,950-$1,948 region.

On the flip side, any attempted recovery above the $1,980 level is likely to confront stiff resistance and remain capped near the $2,000 psychological mark. That said, a sustained strength beyond might trigger a short-covering rally and lift the Gold price to the $2,020-$2,021 hurdle en route to the $2,035-$2,040 region. Some follow-through buying should allow the XAU/USD to climb back towards the all-time high and extend the momentum further towards conquering the $2,100 round-figure mark.

Key levels to watch

XAU/USD

Overview
Today last price 1976.23
Today Daily Change -5.66
Today Daily Change % -0.29
Today daily open 1981.89
 
Trends
Daily SMA20 2007.25
Daily SMA50 1981.86
Daily SMA100 1925.75
Daily SMA200 1824.09
 
Levels
Previous Daily High 1993.13
Previous Daily Low 1975.07
Previous Weekly High 2048.27
Previous Weekly Low 2000.95
Previous Monthly High 2048.75
Previous Monthly Low 1949.83
Daily Fibonacci 38.2% 1981.97
Daily Fibonacci 61.8% 1986.23
Daily Pivot Point S1 1973.6
Daily Pivot Point S2 1965.3
Daily Pivot Point S3 1955.54
Daily Pivot Point R1 1991.66
Daily Pivot Point R2 2001.42
Daily Pivot Point R3 2009.72

 

 

Share: Feed news

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.

Recommended content


Recommended content

Editors’ Picks

USD/JPY off lows, stays pressured near 142.50 ahead of BoJ policy decision

USD/JPY off lows, stays pressured near 142.50 ahead of BoJ policy decision

USD/JPY has bounced off lows but remains pressured near 142.50 in the Asian session on Friday. Markets turn risk-averse and flock to the safety in the Japanese Yen while the Fed-BoJ policy divergence and hot Japan's CPI data also support the Yen ahead of the BoJ policy verdict. 

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold price treads water below record peak, awaits Fedspeak

Gold price treads water below record peak, awaits Fedspeak

Gold price hovers below the all-time peak touched earlier this week amid a bearish US Dollar and rising bets for more upcoming rate cuts by the Fed. Concerns over an economic downturn in China keep the safe-haven Gold price afloat. Fedspeak remains on tap. 

Gold News
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

Ripple (XRP) gained 2.3% since the start of the week. The altcoin’s gains are likely powered by key market movers that include Ripple USD (RUSD) stablecoin, Grayscale XRP Trust performance and the demand for the altcoin among institutional investors.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Forex MAJORS

Cryptocurrencies

Signatures