Gold price languishes near one-week low, bears await break below trading range support
- Gold price trades with a negative bias for the fifth straight day amid smaller Fed rate cut bets.
- A modest USD downtick, along with geopolitical risks, could offer support to the XAU/USD.
- Traders look to the FOMC minutes and the US inflation figures for a fresh directional impetus.
Gold price (XAU/USD) attracts some sellers for the fifth straight day on Tuesday and drops to over a one-week low, closer to the $2,630 trading range support during the first half of the European session. Friday's upbeat US jobs report provided further evidence of a still resilient labor market and forced investors to pare their bets for another oversized interest rate cut by the Federal Reserve (Fed). This, in turn, is seen as a key factor undermining demand for the non-yielding yellow metal.
That said, a modest US Dollar (USD) downtick, along with the risk of a further escalation of geopolitical tensions in the Middle East, could offer some support to the safe-haven Gold price. Traders might also refrain from placing aggressive bets ahead of the release of the FOMC meeting minutes on Wednesday. Apart from this, the US Consumer Price Index (CPI) and the US Producer Price Index (PPI), due on Thursday and Friday, respectively, should provide a fresh impetus to the XAU/USD.
Daily Digest Market Movers: Gold price drifts lower amid expectations for less aggressive Fed policy easing
- The upbeat US jobs report for September released on Friday prompts traders to pare bets for a more aggressive policy easing by the Federal Reserve and undermines the Gold price.
- According to CME's FedWatch tool, market participants are currently pricing in an 85% chance of a 25 basis points rate cut at the next FOMC monetary policy meeting in November.
- The yield on the benchmark 10-year US government bond moved past the 4% threshold for the first time in two months, while the US Dollar moved away from a seven-week high.
- Minneapolis Fed President Neel Kashkari noted on Monday that the overall balance of risks has now shifted away from higher inflation, towards maybe higher unemployment.
- Separately, St. Louis Fed President Alberto Musalem said that he supports additional interest rate cuts and that the economic performance will determine the path of monetary policy.
- Hezbollah fired rockets at Israel's port city of Haifa and a military base near the central city of Tel Aviv, while Israel bombed a couple of buildings in the southern suburbs of Beirut.
- Investors remain concerned that Middle East tensions could turn into a wider conflict, which might act as a tailwind for the safe-haven XAU/USD and help limit deeper losses.
- China’s state planner – the National Development and Reform Commission (NDRC) – said this Tuesday that the downward pressure on China's economy is increasing.
- Traders now look to the release of the FOMC meeting minutes on Wednesday, which will be followed by the latest US inflation figures on Thursday and Friday, respectively.
Technical Outlook: Gold price bulls trying to defend short-term trading range support neear $2,630 area
From a technical perspective, the $2,632-2,630 area, or the lower boundary of a short-term trading range, might continue to protect the immediate downside. A convincing break below might prompt some technical selling and drag the XAU/USD below the $2,600 mark, towards the next relevant support near the $2,560 zone. The corrective decline could extend further towards the next relevant support near the $2,535-2,530 region en route to the $2,500 psychological mark.
Meanwhile, oscillators on the daily chart are holding in positive territory and favor bullish traders. That said, the $2,670-$2,672 area might continue to act as an immediate barrier. This is followed by the $2,685-2,686 zone or the all-time high touched in September, and the $2,700 mark, which if cleared will be seen as a fresh trigger for bulls and set the stage for an extension of a well-established multi-month-old uptrend.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.05% | -0.31% | 0.19% | 0.47% | 0.14% | 0.03% | |
| EUR | 0.09% | 0.04% | -0.21% | 0.28% | 0.55% | 0.20% | 0.11% | |
| GBP | 0.05% | -0.04% | -0.25% | 0.23% | 0.52% | 0.16% | 0.08% | |
| JPY | 0.31% | 0.21% | 0.25% | 0.62% | 0.79% | 0.43% | 0.36% | |
| CAD | -0.19% | -0.28% | -0.23% | -0.62% | 0.28% | -0.05% | -0.16% | |
| AUD | -0.47% | -0.55% | -0.52% | -0.79% | -0.28% | -0.35% | -0.43% | |
| NZD | -0.14% | -0.20% | -0.16% | -0.43% | 0.05% | 0.35% | -0.08% | |
| CHF | -0.03% | -0.11% | -0.08% | -0.36% | 0.16% | 0.43% | 0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
