- Gold price trims earlier losses and reclaims $1670 on Tuesday.
- A strong US dollar underpinned by elevated US bond yields would likely keep precious metals on the defensive.
- According to the IMF, the United States will grow 1.6% in 2022.
- Gold Price Forecast: Range-bound between $1661-$1674.
Gold price is slightly up during the North American session, due to high US T-bond yields, alongside a strong US dollar, ahead of crucial US inflation figures to be released on Thursday, which could shed some light regarding the need for further Fed aggressive hikes. Hence, XAU/USD is trading at $1671, a troy ounce, registering minimal gains at the time of writing.
Sentiment remains deteriorated amidst fears that global central bank tightening would slash corporate earnings while dampening the economic outlook. The US 10-year Treasury bond yield is down by four bps but around YTD highs at 3.92%, while the greenback is pairing earlier losses.
The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, losses 0.03%, at 113.147.
Last week’s US Nonfarm Payrolls report was better than estimated, confirming that the economy added more than 260K jobs. Even though the hiring pace slowed, the Unemployment rate decreased from 3.7% to 3.5%, which is not what the US Federal Reserve needs. Given that the labor market remains tight, further rate hikes by the Fed are expected.
The International Monetary Fund (IMF) adds to fears about global growth. On Tuesday, the IMF cut its forecast for the next year to 2.7% from 2.9% in July, almost 1% less than in January. According to the IMF chief Economist Pierre-Olivier Gourinchas, “The worst is yet to come, and for many people, 2023 will feel like a recession.”
The IMF said that the US would expand at 1% next year, unchanged from its previous forecast; nevertheless, for 2022, it cut its outlook from 2.3% in July to 1.6%.
The US economic docket is empty on Tuesday. On Wednesday, it will feature prices paid by producers. Alongside Mortgage Applications and Fed speakers.
Gold Price Forecast: XAU/USD Technical Outlook
From a daily chart perspective, XAU/USD remains neutral-to-downward biased, with all the DMAs, residing below the price. However, it should be noted that sellers’ failure to crack $1661 exposed essential resistance levels at around the 20-day EMA at $1673.97, followed by the $1700 figure. On the downside, the XAU/USD first support remains at a daily low of $1661. Once cleared, the September 28 cycle low at $1614.92 would be tested, followed by $1600.
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