Gold Price Forecast: XAU/USD licks its wounds on the way to $1,720, Fed Minutes eyed


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  • Gold price rebounds from intraday low to pare recent losses ahead of the key catalysts.
  • Market sentiment remains sluggish as holiday in Japan restricts bond moves, pre-data caution also challenges XAU/USD traders.
  • Bullion bears await the clear signs of Fed’s 75 bps rate hike in December.

Gold price (XAU/USD) picks up bids to consolidate the intraday losses around $1,738 during early Wednesday morning in Europe.

In doing so, the yellow metal cheers the US Dollar weakness ahead of the key data/events scheduled for publishing today. Also likely to have recently favored the metal prices could be the mixed signals from China, despite spreading the coronavirus woes. However, the market’s cautious mood and hopes of hawkish central bank actions join the pessimism surrounding Beijing to keep the XAU/USD bears hopeful.

US Dollar Index (DXY) takes offers to refresh the intraday low near 106.95, down for the second consecutive day, as the US Treasury yields remain pressured as European markets become active. The bond coupons remained mostly sluggish and allowed the DXY bears to take a breather earlier in the day amid a holiday in Tokyo. The reason could be linked to Japan’s status as Asia’s major bond trader.

Recently firmer US data and mixed comments from the Federal Reserve (Fed) officials seemed to have challenged the hawkish expectations from the US central bank, which in turn reduces the US Dollar’s safe-haven demand.

Elsewhere, China’s daily coronavirus counts head towards the record top marked in April while the virus numbers from Beijing, Shanghai and Chongqing also increased. On the same line were headlines from the South China Morning Post (SCMP) quoting Nomura’s Chief Economist Lu Ting as saying, “China’s economic growth next year appears to entirely hinge on a potential exit from its zero-covid policy, and even if such a shift occurs, more pain is inevitable before the real recovery.”

However, an absence of any virus-led deaths from Beijing, after the previous day’s two, joins hopes of recovery and more stimulus to underpin the XAU/USD rebound.

Amid these plays, the US stock futures remain sluggish but the equity traders in Europe and the UK appear optimistic after the previous day’s upbeat closing of Wall Street.

Hence, a likely cautious optimism could help the metal prices to pare recent losses but the overall pessimism surrounding China and Fed’s next moves can weigh on the XAU/USD prices.

Also read: Gold Price Forecast: Federal Reserve minutes could help XAU/USD confirm a bull flag

Technical analysis

A sustained U-turn from the multi-day-old resistance line joins the 10-DMA breakdown and impending bear cross on the Moving Average Convergence and Divergence (MACD) indicator to keep the Gold sellers hopeful.

That said, tops marked in September and October, respectively near $1,735 and $1,729, lure the intraday sellers of the XAU/USD ahead of highlighting the previous resistance line from September 12, around $1,720.

In a case where the yellow metal remains bearish past $1,720, July’s low of $1,680 will be in focus.

Meanwhile, the 50% Fibonacci retracement level of Gold’s June-September downturn, near $1,748, restricts immediate recovery of the metal ahead of the 10-DMA level of $1,757.

It’s worth noting, however, that the XAU/USD bulls should remain cautious unless witnessing a clear upside break of the $1,778 resistance confluence, comprising the previously stated resistance line from July 04 and the 61.8% Fibonacci retracement level.

Gold price: Daily chart

Trend: Further downside expected

Additional important levels

Overview
Today last price 1738.04
Today Daily Change -2.39
Today Daily Change % -0.14%
Today daily open 1740.43
 
Trends
Daily SMA20 1706.46
Daily SMA50 1682.38
Daily SMA100 1711.67
Daily SMA200 1800.81
 
Levels
Previous Daily High 1749.81
Previous Daily Low 1737.1
Previous Weekly High 1786.55
Previous Weekly Low 1747.6
Previous Monthly High 1729.58
Previous Monthly Low 1617.35
Daily Fibonacci 38.2% 1744.95
Daily Fibonacci 61.8% 1741.96
Daily Pivot Point S1 1735.08
Daily Pivot Point S2 1729.74
Daily Pivot Point S3 1722.37
Daily Pivot Point R1 1747.79
Daily Pivot Point R2 1755.16
Daily Pivot Point R3 1760.5

 

 

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