- Gold price attracts some buyers during the Asian session, albeit lacks follow-through.
- A modest US Dollar downtick turns out to be a key factor lending support to the metal.
- Bets for one more rate hike by the Federal Reserve in 2023 and the risk-on mood cap gains.
Gold price builds on Friday's late rebound from the $1,904-$1,903 area and edges higher during the Asian session on the first day of a new week, though lacks bullish conviction. The XAU/USD currently trades around the $1,916 region, up less than 0.10% for the day, and remains below a two-week high touched last Thursday.
The US Dollar (USD) kicks off the new week on a softer note and moves away from its highest level since early June, which, in turn, is seen as a key factor benefitting the Gold price. A softer Greenback tends to benefit the US Dollar-denominated commodities, including the XAU/USD. That said, the prospects for further policy tightening by the Federal Reserve (Fed) hold back traders from placing aggressive bullish bets around the non-yielding Gold price and keep a lid on any further gains, at least for the time being.
In a keynote address at the Jackson Hole Symposium, Fed Chair Jerome Powell said on Friday that the US central bank may need to raise interest rates further to cool still-too-high inflation. He added that policymakers would proceed carefully as they decide whether to tighten further or to hold the interest rate constant. This reaffirms market bets for one more 25 basis point (bps) lift-off by the end of this year, which remains supportive of elevated US Treasury bond yields and continues to lend support to the USD.
Apart from this, the risk-on impulse, triggered by new measures announced by China over the weekend, might further contribute to capping the safe-haven Gold price. It is worth recalling that China on Sunday announced a reduction in the stamp duty on stock trading to boost the struggling market and revive investor confidence. The finance ministry said in a brief statement that the levy charged on stock trades will drop from 0.1% to 0.05% as of August 28, the first reduction since 2008. This remains supportive of a generally positive tone around the equity markets and might hold back bulls from placing fresh bets around the XAU/USD.
Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Monday, leaving the Gold price act at the mercy of the USD price dynamics and the broader risk sentiment. Any meaningful move in either direction, meanwhile, is more likely to be limited ahead of this week's important US macro releases, including the closely-watched Non-Farm Payrolls (NFP) report on Friday. This makes it prudent to wait for strong follow-through buying before positioning for an extension of the recent goodish recovery from the $1,885 area, or the lowest level since March 13 touched last week.
Technical 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 clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.