|

Gold Price Forecast: XAU/USD stages a modest recovery from multi-week low, upside seems limited

  • Gold price gains some positive traction on Thursday, albeit lacks follow-through.
  • Bets for more rate hikes by Federal Reserve underpin the US Dollar and cap gains.
  • A positive risk tone also contributes to keeping a lid on the safe-haven commodity.

Gold price ticks higher during the Asian session on Thursday and reverses a part of the previous day's decline to the $1,933-$1,932 region, or a three-week low. The XAU/USD currently trades with a mild positive bias around the $1,937-$1,938 area, up nearly 0.20% for the day, though any meaningful appreciating move still seems elusive.

The US Dollar (USD) enters a bullish consolidation phase and witnesses a subdued/range-bound price action near its highest level since July 7. This, in turn, is seen as a key factor lending some support to the US Dollar-denominated Gold price. The downside for the USD, meanwhile, remains cushioned in the wake of firming expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. This, in turn, might hold back traders from placing aggressive bullish bets and cap the upside for the non-yielding yellow metal.

The ADP National Employment report showed on Wednesday that private-sector employers in the United States (US) added 324K jobs in July as compared to the 189K anticipated. This points to continued labour market resilience and should shield the economy from a recession, allowing the Fed to stick to its hawkish stance. The expectations keep the US Treasury bond yields elevated, which supports prospects for a further near-term move up for the USD and suggests that the path of least resistance for the Gold price is to the downside.

Investors, meanwhile, now seem to have digested the Fitch downgrade of the US government's credit rating to AA+ from AAA late Tuesday. Adding to this, China's Caixin Services PMI unexpectedly rose to 54.1 in July from 53.9 in the previous month and leads to a slight recovery in the global risk sentiment. This is evident from a modest rebound in the US equity futures, which might further contribute to keeping a lid on the safe-haven Gold price and adds credence to the negative outlook, warranting some caution for bullish traders.

Market participants now look forward to the US economic docket – featuring the release of the usual Weekly Initial Jobless Claims, the ISM Services PMI and Factory Orders later during the early North American session. This, along with the US bond yields, might influence the USD price dynamics and provide some impetus to the Gold price. Apart from this, traders will take cues from the broader risk sentiment to grab short-term opportunities, though the focus remains on the US jobs data, popularly known as the NFP report on Friday.

Technical levels to watch

XAU/USD

Overview
Today last price1937.87
Today Daily Change3.46
Today Daily Change %0.18
Today daily open1934.41
 
Trends
Daily SMA201952.49
Daily SMA501945.39
Daily SMA1001968.7
Daily SMA2001892.15
 
Levels
Previous Daily High1954.85
Previous Daily Low1932.97
Previous Weekly High1982.2
Previous Weekly Low1942.65
Previous Monthly High1987.54
Previous Monthly Low1902.77
Daily Fibonacci 38.2%1941.33
Daily Fibonacci 61.8%1946.49
Daily Pivot Point S11926.64
Daily Pivot Point S21918.86
Daily Pivot Point S31904.76
Daily Pivot Point R11948.52
Daily Pivot Point R21962.62
Daily Pivot Point R31970.4

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress
The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.