Gold Price Forecast: XAU/USD to test $1720 on a break below $1750

FXStreet Insights Team FXStreet

In the lead-up to the much-awaited US Nonfarm Payrolls (NFP) showdown, gold is licking its wounds after the previous decline, although it remains in a familiar range above $1750. In the view of FXStreet’s Dhwani Mehta, XAU/USD’s path of least resistance appears down.

See – Gold Price Forecast: XAU/USD points to deeper decline towards the $1670 low – Commerzbank

Treasury yields keep rallying amid Fed’s tapering bets, ahead of NFP

“Gold’s upside potential appears limited as the US Treasury yields continue to climb on the Fed’s tapering, which is almost seen as a done deal ahead of the all-important NFP release due later in the NA session on Friday. The benchmark 10-year yields sit at the highest levels since June, weighing on the non-interest-bearing gold price.”

“The US economy is seen adding 488K jobs in September vs. 235K jobs created in August. Any number below 300K is likely to fade the Fed’s tapering expectations, which could fuel a fresh uptrend in gold price. However, the risks appear to the downside for gold price after the upbeat US ADP jobs data while Fed remains on track to dial back the monetary policy stimulus.”

“On a sustained break below the $1750-$1745 demand area, gold bears could tighten their grip, exposing the multi-week troughs near $1720.”

“Daily closing above the 21-Daily Moving Average (DMA) at $1763 is critical to reverse the near-term bearish momentum in XAU/USD. Further up, gold buyers will target the downward-sloping 50-DMA at $1780, above which a test of the $1800 round number will be inevitable. At that level, the crucial 200-DMA aligns.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD breaks below 0.7000 ahead of inflation data

AUD/USD has accelerated its downward trend on Tuesday, breaching below the key 0.7000 yardstick ahead of the opening bell in Asia on Wednesday. Indeed, spot has retreated for the second day in a row despite the hawkish hike by the RBA early on Tuesday and in response to the continuation of the move higher in the Greenback. Looking ahead, all the attention will be on the release of Australia’s inflation data on Wednesday.

USD/JPY consolidates near 157.50 as a bullish USD counters intervention risks

USD/JPY struggles to capitalize on the overnight bounce from a one-week low, consolidating around 157.50 in the Asian session on Tuesday. Trump's concerns about the Japanese Yen's weakness fueled speculation about another US-Japan joint intervention. This, along with the hawkish BoJ, underpins the JPY and caps the currency pair. Meanwhile, rising Fed rate-hike bets and oil-driven inflation fears continue to push US bond yields to multi-year highs, keeping the US Dollar pinned near a two-month high and supporting the pair.

Gold trims gains; back toward $4,150

Gold now surrenders some of its initial advance and retests the $4,150 zone per troy ounce on Tuesday. Meanwhile, the move higher in the yellow metal comes despite the firmer US Dollar and rising US Treasury yields across the board, while escalating geopolitical tensions appear to limit the downside potential.

XRP advances within a robust technical structure

Ripple (XRP) shows signs of stabilizing after reclaiming support at $1.50 on Tuesday. A robust technical structure underpins the token’s short to medium-term bullish outlook. Still, XRP is not out of the woods yet, as profit-taking and buyer exhaustion could weigh on price action and extend the recent correction from September highs around $1.66.

RBA recap: Rate hikes are on the table as demand stays too strong

The Reserve Bank of Australia unanimously tightened monetary policy, warning that inflation remained too high and that several upside risks had begun to materialise. Governor Michele Bullock said the Board would raise rates again if necessary.

Silver is more volatile than Gold ahead of PCE and NFP. This chart shows the positioning gap

The market’s attention is focused on American data this week, but there’s something only those with a trained eye may be looking at: Gold and Silver positioning gap. Financial markets are moving on fears, mostly related to persistently high energy prices driven by the Middle East war. Sure, the US Dollar (USD) is strong, but at what cost?