- 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
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
Editors’ Picks
EUR/USD breaks below 1.1000 on stellar NFP
The buying bias in the Greenback gathers extra pace on Friday after the US economy created far more jobs than initially estimated in September, dragging EUR/USD to the area of new lows near 1.0950.
GBP/USD breaches 1.3100 after encouraging US Payrolls
The continuation of the uptrend in the US Dollar motivates GBP/USD to accelerates its losses and breaches 1.3100 the figure in the wake of the release of US NFP.
Gold rebounds from daily lows and flirts with $2,670
Following a post-NFP dip to the $2,640 region, Gold prices now embarks on an acceptable rebound and retest the area of $2,670 per ounce troy despite the marked advance in the US Dollar and rising US yields across the board.
US Payrolls surge in September, as 50bp rate cut ruled out
US payrolls data surprised on the upside in September, rising by 254k, smashing expectations of a 150k rise. The unemployment rate fell to 4.1% from 4.2%, average hourly earnings increased to a 4% YoY rate and there was a 72k upwards revision to the previous two months’ payrolls numbers.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.