Gold Price Forecast: XAU/USD holds steady above $1,650 ahead of the key Fed decision

• Gold edges higher for the second straight day amid modest USD weakness.
• Hopes for a less hawkish Fed continue to exert pressure on the greenback.
• The upbeat US ADP report fails to impress the USD bulls or provide impetus.
• The market focus remains on the crucial FOMC monetary policy decision.

Gold gains some positive traction for the second successive day on Wednesday and maintains its bid tone through the early North American session. The XAU/USD is currently placed near the top end of its daily range, just above the $1,655 level, as traders keenly await the highly-anticipated FOMC monetary policy decision.

In the meantime, expectations for a less hawkish Fed prompt fresh US dollar selling, which, in turn, is seen offering some support to the dollar-denominated gold. Market participants expect that the US central bank might slow the pace of its rate-hiking cycle amid the deteriorating outlook for the US economy. Even the upbeat ADP report, showing that private-sector employers added 239K jobs in October against 193K expected, fails to boot the USD.

Despite the supporting factor, the XAU/USD lacks bullish conviction ahead of the crucial central bank event risk. The Fed will announce its policy decision later during the US session and is expected to deliver another supersized 75 bps rate hike for the fourth time in as many meetings. The market focus, however, will remain glued to the accompanying monetary policy statement and Fed Chair Jerome Powell's comments at the post-meeting press conference.

Investors will look for fresh clues about the pace of future policy tightening by the Fed, which will play a key role in influencing the USD price dynamics. This, in turn, will help determine the next leg of a directional move for the non-yielding gold. The current market pricing indicates over a 50% chance of a 50 bps Fed rate hike move in December. A more hawkish signal will set the stage for the resumption of the recent bearish trend for the XAU/USD.

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Gold Price Forecast: XAU/USD to remain vulnerable amid climbing yields and strong dollar – Commerzbank

Gold price is on the retreat again. Strategists at Commerzbank expect the yellow metal to stay offered as rising yields lift the dollar.

US interest rate at its highest level since August 2009

“The renewed price weakness was triggered by a noticeably stronger US dollar again and rising bond yields as further pronounced rate hikes by the Fed are anticipated. This puts the real US interest rate using market-based inflation expectations at 1.7%, its highest level since August 2009. This makes gold less attractive as a non-interest-bearing investment.”

“For as long as the headwind generated by the US dollar and climbing (real) yields persist, gold is likely to remain on the defensive.”

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Gold Price Forecast: XAU/USD to sustain a move downward – TDS

Gold price has extended its gains above $1,720. Nonetheless, strategists at TD Securities still believe that XAU/USD is likely to trend lower.

Shanghai traders start to shy away from gold

“A prolonged period of restrictive rates suggests traders should ignore gold's siren calls, as a sustained downtrend will likely prevail, while quantitative tightening continues to drive real rates higher.”

“Money managers hold their largest net short in gold since 2018, driven by trend followers. We expect a break north of $1,740 could fuel CTA stop-outs, suggesting the squeeze could run further.” 

“Shanghai traders have shied away from precious metals, leaving the market with fewer offers.”

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Gold Price Forecast: XAU/USD rebounds from YTD low, upside potential seems limited

Gold reverses an intraday slide to its lowest level since April 2020 amid a modest USD pullback.

Recession fears, a softer risk tone further extend some support to the safe-haven commodity.

Bets for more aggressive Fed rate hikes to limit the USD downfall and cap gains for the metal.

Gold stages a goodish bounce from its lowest level since April 2020 touched earlier this Monday and climbs to a fresh daily high during the early European session. Bulls, however, struggle to capitalize on the move beyond the $1,650 level and remain at the mercy of the US dollar price dynamics.

In fact, the USD Index, which measures the greenback's performance against a basket of currencies, surrenders its early gains to a fresh two-decade high amid a recovery in the European currencies. This, in turn, assists the dollar-denominated gold to attract some buyers near the $1,626 region. Apart from this, the prevalent cautious market mood, amid worries about a deeper global economic downturn, turns out to be another factor offering support to the safe-haven precious metal.

The attempted recovery, however, lacks follow-through buying, warranting caution before positioning for any meaningful upside. The Fed last week delivered another supersized rate hike and signalled that it will likely undertake more aggressive increases at its upcoming meetings to tame inflation. A more hawkish stance adopted by the US central bank remains supportive of elevated US Treasury bond yields and should limit any meaningful USD corrective slide, at least for the time being.

The yield on the rate-sensitive 2-year US government bond stands tall near a 15-year high and the benchmark 10-year Treasury note hits the highest in 11 years. This might further contribute to keeping a lid on the non-yielding gold. In the absence of any relevant economic data from the US, traders will take cues from speeches by influential FOMC members. This, along with the US bond yields, the USD price dynamics and the broader risk sentiment might provide some impetus to gold.

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Gold Price Forecast: XAU/USD remains poised to test $1,688 key support

Gold price is licking its wounds near $1,700 after Tuesday’s sharp sell off.

The US dollar retreats amid a USD/JPY slide and a pause in the yields rally.

XAU/USD looks south amid a wall of powerful resistance levels.

Gold price is consolidating the previous sell off, as bears are taking a breather before resuming the next leg lower. A pause in the US Treasury yields rally combined with a broad US dollar retreat is offering a temporary reprieve to gold buyers. The bright metal remains vulnerable amid the revival of hopes for aggressive Fed tightening in the coming months. The US inflation data outpaced estimates and squashed the ‘peak inflation’ narrative, suggesting that the Fed will continue with bigger and more rapid rate hikes to control inflation. According to the CME FedWatch Tool, markets are now pricing a 36% chance of a full percentage point Fed rate hike next week. Attention now turns towards the US key events in the second half of the week for fresh trading opportunities in the bullion.

Gold Price: Key levels to watch

The Technical Confluence Detector shows that the gold price is eyeing a firm break below the SMA5 four-hour at $1,702 to resume the bearish momentum towards the previous day’s low of $1,697.

Bears will then gear up for a test of the previous week’s low of $1,691, below which the convergence of the pivot point one-day S1 and Bollinger Band one-day Lower at $1,688 will be put at risk.

On the flip side, strong resistance is seen around $1,707, the confluence of the Fibonacci 61.8% one-week and the Fibonacci 23.6% one-day. Acceptance above the latter is needed to offer a fresh boost to XAU bulls.

The next relevant upside target is aligned at $1,710, the meeting point of the Fibonacci 38.2% one-day and SMA10 one-day. Further up, the intersection of the SMA5 one-day and the Fibonacci 38.2% one-week at $1,715 will be the level to beat for bulls.

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Gold Price Forecast: XAU/USD jumps closer to Friday’s swing high amid notable USD supply

• Gold catches fresh bids on Monday and turns positive for the second successive day.
• The prevalent USD selling bias turns out to be a key factor boosting the commodity.
• A positive risk tone, the prospects for more aggressive central banks continue to cap.

Gold attracts some dip-buying near the $1,712 area on Monday and turns positive for the second straight day. The XAU/USD refreshes its daily high, around the $1,726-$1,727 region during the European session and moves back closer to a one-and-half-week high touched on Friday.

The US dollar extends last week's sharp retracement slide and remains under intense selling pressure on the first day of a new week. In fact, the USD Index, which measures the greenback's performance against a basket of currencies, dives to a fresh monthly low and offers support to the dollar-denominated gold.

Given that the markets have already priced in a 75 bps Fed rate hike move in September, subdued action around the US Treasury bond yields turns out to be a key factor weighing on the greenback. Apart from this, growing worries about a deeper global economic downturn further contribute to driving flows towards safe-haven gold.

That said, a positive risk tone - as depicted by a generally upbeat mood around the equity markets - could act as a headwind for the precious metal. Furthermore, the prospects for a more aggressive policy tightening by major central banks warrant some caution before positioning for any further appreciating move for the non-yielding gold.

Investors might also prefer to move to the sidelines ahead of the latest US consumer inflation figures, due for release on Tuesday. The crucial US CPI report will influence the Fed's policy outlook and dictate the near-term USD trajectory. This, in turn, will help investors to determine the next leg of a directional move for gold.

In the meantime, the XAU/USD is more likely to enter a consolidation phase amid absent relevant market-moving economic data from the US. That said, the US bond yields, the USD price dynamics, along with the broader risk sentiment, might still provide some impetus to gold and allow traders to grab short-term opportunities.

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Gold Price Forecast: XAU/USD to meltdown below the $1,675 mark – TDS

With every downtick, the risk of capitulation in gold is rising. Economists at TD Securities expect the yellow metal to slump below the $1,675 level.

China's appetite for gold has remained resilient

“The top players in Shanghai markets continue to add to their gold length, despite a depreciating CNY. These flows, alongside central bank demand, have likely kept gold from melting in a liquidity vacuum amid a hawkish Fed narrative, Nonetheless, the risk of capitulation from bloated prop-shop positioning is growing with every tick lower in prices as we approach this cohort's pandemic-era entry levels.”

“The downtrend in gold is gaining steam, as the breadth of technical signals short continues to firm.”

“The risk of a breakout in the broad dollar index could coincide with a meltdown below the $1,675 range in gold.”

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Gold Price Forecast: XAU/USD remains on the defensive amid risk-on, Fed rate-hike jitters

Gold attracts some dip-buying on Tuesday, though lacks any strong follow-through.

Retreating US bond yields undermine the USD and offer some support to the metal.

The risk-on impulse caps the upside amid expectations for aggressive Fed rate hikes.

Gold reverses a modest intraday dip to the $1,729 area and turns neutral during the first half of the European session, though it lacks any follow-through. The XAU/USD is currently seen exchnaging hands at around the $1,735 region and so far, has struggled to capitalize on the overnight bounce from over a one-month low.

The US dollar meets with a fresh supply for the second straight day and retreats further from a 20-year high touched the previous day, which, in turn, offers some support to the dollar-denominated gold. The ongoing USD profit-taking slide could be solely attributed to another decline in the US Treasury bond yields, which further benefits the non-yielding gold.

The upside, however, remains limited amid firming expectations for a supersized 75 bps Fed rate hike at the September meeting. The bets were reaffirmed by Fed Chair Jerome Powell's hawkish remarks on Friday, signalling that interest rates would be kept higher for longer to bring down inflation. This, along with the risk-on impulse, seem to cap gains for gold.

Chinese authorities pledged to stimulate the world’s second-largest economy and boosted investors' confidence. This is evident from a strong rally in the equity markets, which might hold back traders from placing bullish bets around the safe-haven precious metal. This warrants caution before confirming that gold has formed a bottom and positioning for any further gains.

Market participants look forward to the US economic docket - featuring JOLTS Job Openings data and the Conference Board's Consumer Confidence Index later during the early North American session. This, along with the US bond yields, might influence the USD. Apart from this, the risk sentiment might contribute to producing short-term trading opportunities around gold.

From a technical perspective the pair is in a medium-term downtrend that began in March 2022. This suggests the overall bias is still for lower prices to come. Major, multiple support – comprised of key lows from 2021 as well as the 200-week SMA – kicks in at $1680.00, however, and if price gets that low it will likely find a floor there and, either consolidate or bounce.

The daily chart is more complex and less bearish. Monday's dragon-fly doji candlestick is a bullish reversal insignia which will be confirmed if today (Tuesday, August 30) ends bullishly green – if not then sellers may still prevail. Confirmation would suggest at least the potential for a recovery back up to the 50-day SMA and the swing high at around $1760.00. Furthermore, markets are slow, traditionally a warning to traders not to go short. Many may have gone into wait-and-see mode till the fog clears and the market shows its hand. 

This might not happen until the closely-watched US monthly jobs report, popularly known as NFP, is released on Friday. August's employment figures will provide some insight into the economy's health in the face of rising rates and stubbornly high inflation. This, in turn, will drive the USD demand and gold prices ahead of the next FOMC meeting in September. A better-than-expected figure will suggest the economy is still booming and the Fed has more work to do to tame inflation, strengthening the dollar in the process but depressing gold. A weaker-than-expected result will have the opposite effect and probably help gold prices go higher.  

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Gold Price Forecast: XAU/USD capped by sellers aligned around $1,750

Gold price has been on the back foot, despite the generally negative market mood, currently trading at around $1,745.80 a troy ounce. The metal bottomed at the beginning of the week at $1,727.70, as the dollar outperformed other safe-haven assets throughout the first half of the week. Nevertheless, the greenback got hit by poor US data released on Tuesday, pulling down from its recent highs and correcting extreme overbought conditions against most major rivals. The bright metal peaked at $1,754.07 but so far cannot retain the $1,750 mark, with sellers quickly appearing in attempts to surpass the level. XAU/USD is seen at a critical juncture as bull-bear tug-of-war could set in, FXStreet’s Dhwani Mehta reports.

Meanwhile, financial markets are relatively quiet at the moment as investors await the US Durable Goods Orders report, expected to post a modest 0.6% advance in July. Such a tepid report will likely exacerbate concerns about a recession and weigh on high-yielding assets. The dollar will likely resume its bullish momentum after the latest pullback and is seen strengthening against its brighten rival. 

XAU/USD bears return after rejection above $1,750

“The 14-day Relative Strength Index (RSI) is turning south once again while below the midline, suggesting that the downside pressure could build up in the sessions ahead.”

“Adding credence to the bearish bias, the 50-Daily Moving Average (DMA) is fast approaching the 21 DMA from above.”

“A sustained break below the Fibonacci Retracement (Fibo) level of the recovery from yearly lows of $1,681 to the August 10 high of $1,808 at $1,729 will open up the downside towards the $1,700 mark.”

“Bulls need a daily closing above the $1,750 psychological level, above which the 38.2% Fibo resistance at $1,760 will be probed. Further up, the meeting point of the 21 and 50 DMAs at $1,769 will be a tough nut to crack for XAU bulls.”

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Gold Price Forecast: XAU/USD retreats from 50-HMA with eyes on Taiwan, US macro

Gold price fades recovery moves as traders struggle for clear directions.

China Caixin Services PMI, mixed Fedspeak favor XAU/USD buyers.

US-China tensions over Taiwan, recession woes keep sellers hopeful.

US ISM Services PMI, Factory Orders may entertain traders but risk catalysts are more important.

Gold price (XAU/USD) fails to extend daily gains around $1,770 amid the early Wednesday morning in Europe. In doing so, the yellow metal buyers struggle for fresh clues to stretch the latest recovery moves inside a trend-widening chart pattern.

Mixed concerns over Taiwan and an absence of strongly hawkish Fed comments seem to restrict immediate XAU/USD moves. Also challenging the gold price is the upbeat prints of China Caixin Services PMI for July contrasting to the official activity numbers at home and abroad, as well as broad recession woes.

US House Speaker Nancy Pelosi vows to not abandon Taiwan amid Chinese pressure, per Bloomberg, while Taiwan President shows readiness to retaliate Beijing military moves, if any. On the other hand, the private services gauge from the dragon nation rose to 55.5 versus 48 expected and 54.5 prior.

Elsewhere, St. Louis Federal Reserve President James Bullard and Cleveland Fed President Loretta Mester talked down US recession concerns while supporting chatters about the 50 basis points (bps) rate hike in September. However, San Francisco Fed President Mary Daly said that she is looking for incoming data to decide if they can downshift the rate hikes or continues at the current pace, as reported by Reuters.

Amid these plays, S&P 500 Futures rise 0.25% intraday while the US 10-year Treasury yields drop 1.5 basis points (bps) to 2.726% at the latest.

Given the market’s indecision, gold traders should wait for the US Factory Orders for June and ISM Services PMI for July. Also important will be to the headlines surrounding China, Taiwan and Fed.

Technical analysis

Gold price pares daily gains inside a one-week-old megaphone trend widening technical chart formation on the hourly play.

That said, the XAU/USD’s latest pullback from the 50-HMA, at $1,770 by the press time, lacks support from the MACD, which in turn hints at the quote’s further advances towards the previous day’s high near $1,788.

However, upper line of the aforementioned megaphone pattern, near $1,790, could challenge the bullion’s further upside.

Meanwhile, pullback moves may initial aim for the stated formation’s support line, close to $1,755, before directing gold sellers towards the 50% Fibonacci retracement of July 27 to August 02 upside, near $1,749.

Also acting as the downside filter is the 61.8% Fibonacci retracement level around $1,740.

Overall, gold price grinds higher and may witness further volatility inside the megaphone.

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