Gold Price Forecast: XAU/USD trades with modest losses, downside seems limited amid softer USD

Gold witnesses some selling on Tuesday and reverses a part of the previous day’s positive move.
A generally positive tone around the equity markets acts as a headwind for the safe-haven metal.
Sliding US bond yields keep the USD on the defensive and seem to offer support to the XAU/USD.

Haresh Menghani FXStreet

Gold edges lower on Tuesday and erodes a part of the previous day's strong positive move back closer to a one-month high touched last week. The XAU/USD remains on the defensive through the early European session and is currently trading around the $1,785 region, down over 0.15% for the day.

Signs of stability in the equity markets seem to undermine the safe-haven gold, though a combination of factors should help limit the downside. Growing recession fears, along with US-China tensions over Taiwan, keep a lid on any optimistic move in the markets. Apart from this, a further decline in the US Treasury bond yields continues to weigh on the US dollar, which, in turn, is seen lending some support to the dollar-denominated commodity. Bulls, however, seem reluctant to place aggressive bets amid speculations that the Fed would retain its aggressive policy tightening path.

In fact, the markets are pricing in around 70% chances that the Fed would hike interest rates by 75 bps at its September meeting. The bets were reaffirmed by Fed Governor Michelle Bowman's remarks on Saturday, saying that the US central bank should consider more 75 bps hikes at coming meetings to bring inflation back down. This, in turn, is seen acting as a headwind for the non-yielding gold. Investors might also refrain from placing aggressive bets and prefer to move on the sidelines ahead of the latest US consumer inflation figures, scheduled for release on Wednesday.

The US CPI report would be looked upon for fresh clues about the Fed's near-term policy outlook. This would play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the precious metal. In the meantime, the US bond yields will drive the USD demand amid absent relevant market-moving economic releases. Apart from this, the broader market risk sentiment should produce short-term trading opportunities around gold. The recent range-bound price action, however, points to indecision among traders and warrants caution.

Technical levels to watch

XAU/USD

Overview
Today last price	1784.11
Today Daily Change	-4.95
Today Daily Change %	-0.28
Today daily open	1789.06

Trends
Daily SMA20	1739.56
Daily SMA50	1787.64
Daily SMA100	1843.51
Daily SMA200	1841.92

Levels
Previous Daily High	1790.09
Previous Daily Low	1770.9
Previous Weekly High	1794.97
Previous Weekly Low	1754.35
Previous Monthly High	1814.37
Previous Monthly Low	1680.91
Daily Fibonacci 38.2%	1782.76
Daily Fibonacci 61.8%	1778.23
Daily Pivot Point S1	1776.61
Daily Pivot Point S2	1764.16
Daily Pivot Point S3	1757.42
Daily Pivot Point R1	1795.8
Daily Pivot Point R2	1802.54
Daily Pivot Point R3	1814.99

Author

Haresh Menghani

FXStreet

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

AUD/USD softens as risk-off mood meets FOMC countdown

The Aussie Dollar loses 0.11% against the Greenback on Tuesday as risk appetite remains negative amid calls from AI company CEOs to slow development, while the FOMC monetary policy meeting looms. Expectations for a Fed rate hike undermine the AUD/USD, which trades at 0.7130.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold set to fall toward $4,000 as Warsh faces a Fed rate-hike dilemma

As the Federal Reserve monetary policy announcement approaches and the Middle East war intensifies, the US Dollar resumes its advance. Gold price posted a tepid attempt to recover its shine in early August, but with renewed USD demand, the bright metal faltered miserably and is now closer to the $4,000 mark than the encouraging $4,700 peak from a month ago.

Ethereum continues to attract capital despite impending rate hike and Clarity Act failure

Ethereum declined to $2,400 on Tuesday after the Clarity Act failed to progress in the Senate. Despite that and the market's near certainty of an interest rate hike at the next Federal Reserve (Fed) meeting, the top altcoin has continued to attract fresh capital. Ethereum buyers have been dominating sellers over the past few days.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.