Gold Price Forecast: XAUUSD eyes $1,845 and $1,842 on aggressive Fed tightening bets – Confluence Detector

Gold Price slips from five-week highs as Fed set to hike rate aggressively.
The US dollar, yields soar on the Fed expectations and risk-off flows.
XAUUSD remains exposed to more downside ahead of the Fed decision.

Dhwani Mehta FXStreet

Gold Price is correcting sharply from five-week peaks of $1,879, reversing most of Friday’s strong rally. The inverse correlation between the US Treasury yields and the bright metal is back in play. Benchmark 10-year yields are trading at their highest level since 2018 on bets that the Fed will go for a 75 bps rate hike at least once in its next three meetings to curb rampant inflation. The zero-yielding gold is feeling the heat of soaring yields, which have driven the US dollar higher. Aggressive Fed tightening expectations have overshadowed heightening recession fears while influencing XAUUSD price. Markets now eagerly await Wednesday’s Fed decision for the rate hike guidance and its impact on the related assets.

Also read: Gold Price Forecast: 50 DMA could be a tough nut to crack, as focus shifts to Fed

Gold Price: Key levels to watch

The Technical Confluence Detector shows that Gold Price challenged the fierce support at $1,853, which is the convergence point of the 10-day SMA and 200-4hr SMA.

The next significant downside target is pegged at $1,845, where both the daily and weekly Fibonacci 61.8% retracements merge.

Further south, the 200-day SMA at $1,842 will test bullish commitments once again, opening floors for a retest of the weekly S1 pivot point and daily S1 pivot point where they intersect at $1,839.

On the flip side, bulls will test the confluence of the daily and monthly Fibonacci 38.21% retracements at $1,858, above which a fresh advance towards $1,863 cannot be ruled out.

At that level, the monthly Fibonacci 61.8% and daily and weekly Fibonacci 23.6% retracements coincide.

Friday’s high of $1,876 will be put to test should bulls resume their recent momentum.

Here is how it looks on the tool

About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD holds above multi-month lows and 0.6900 ahead of Fed's Warsh

AUD/USD struggles to capitalize on the previous day's modest bounce from its lowest level since early July and trades above 0.6900 during the Asian session on Friday. Thursday's disappointing Australian jobs data tempered RBA rate-hike bets, capping the Aussie. The US Dollar (USD), meanwhile, is regaining positive traction as this week's hot US CPI and PPI reports keep Fed rate hike bets firmly on the table. This further keeps a lid on the pair ahead of Fed Chair Kevin Warsh speech.

USD/JPY climbs above 158.00 as USD edges higher ahead of Warsh's speech

USD/JPY attracts some buyers during the Asian session on Friday, building on the overnight bounce from the vicinity of 157.50, or a one-week low, amid the emergence of some US Dollar buying. This week's hot US CPI and PPI reports lifted Fed rate-hike bets, which, along with stable US bond yields and geopolitical uncertainties, help revive USD demand. Traders, however, remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen, which could cap the currency pair ahead of Fed Chair Kevin Warsh's speech.

Gold weakens to $4,150 amid reviving USD demand as traders await Warsh's speech

Gold drifts lower during the Asian session on Friday, reversing part of the previous day's move up amid reviving US Dollar demand. US inflation data released this week reaffirmed bets for at least one Fed rate hike this year, while US bond yields stabilize after Thursday's steep decline. This, along with geopolitical risks, underpins the safe-haven USD, which, in turn, is seen weighing on bullion ahead of Fed Chair Kevin Warsh's speech.

Ethereum reclaims $2,400 as PPI hits 6.3% and yields fall

Ethereum (ETH) is back above $2,400 on Thursday, rebounding from a brief decline toward $2,340, which was sparked by an upside surprise in the US wholesale inflation report. The Producer Price Index (PPI) increased 1.3% monthly and 6.3% annually in September, far above expectations of 0.5% and 5.3%, respectively.

The Iran war will eventually end. Tariffs won't. Here's the problem

Two cost shocks are in the September Consumer Price Index (CPI), and they have different half-lives. Energy is up 20.4% on the year and accounts for about 1.3 points of the 3.7% headline, and that shock reverses when Oil does: Brent was back at its pre-war price on July 1 and above $100 again by the end of the month, after the ceasefire collapsed on July 8.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.