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 lifted by Putin, Fed to knock it down – TDS

Gold capitalized on safe-haven flows and climbed above $1,670 as investors seek refuge as Russian President Vladimir Putin announces military mobilization. But eyes are on the Federal Reserve. A hawkish hike is set to weigh on the yellow metal, strategists at TD Securities report.

FOMC to provide more hawkish signals

“Gold is catching a safe-haven bid as Russia has escalated the war in Ukraine with Putin declaring a partial mobilization in Russia and threatening use of nuclear weapons. Nonetheless, it is Fed day, where aggressive Fed expectations are being priced in.”

“The persistence of inflation continues to support an aggressive effort by the Fed, and we expect the FOMC to deliver its third consecutive 75 bps rate hike, bringing the policy stance decidedly above its estimate of the longer-run neutral level. We also look for the Committee to provide more hawkish signals through the update of its economic projections and for Chair Powell to build on his Jackson Hole message.” 

“While prices are certainly weak, precious metals' price action could still have further to fall as the restrictive rates regime is set to last for longer. Indeed, gold and silver prices have tended to display a systematic underperformance when markets expect the real level of the Fed funds rate to rise above the neutral rate, as estimated by Laubach-Williams.”

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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: XAUUSD surrenders intraday gains amid modest USD strength

Gold price struggles to preserve its modest intraday gains amid the emergence of some USD buying.

The prospects for a more aggressive major central banks also acted as a headwind for the metal.

The downside seems limited ahead of this week’s key US macro releases and the FOMC decision.

Gold price attracted some selling near the $1,728 region on Tuesday and retreated to the lower end of its daily range during the first half of the European session. The XAUUSD was last seen trading just below the $1,720 level, nearly unchanged for the day.

The US dollar staged a goodish rebound from the vicinity of its lowest level since July 5 touched the previous day, which, in turn, acted as a headwind for the dollar-denominated gold. This, along with the prospects for a more aggressive move by major central banks to curb soaring inflation, was seen as another factor weighing on the non-yielding yellow metal.

Gold price struggles to preserve its modest intraday gains amid the emergence of some USD buying.

The prospects for a more aggressive major central banks also acted as a headwind for the metal.

The downside seems limited ahead of this week’s key US macro releases and the FOMC decision.

Gold price attracted some selling near the $1,728 region on Tuesday and retreated to the lower end of its daily range during the first half of the European session. The XAUUSD was last seen trading just below the $1,720 level, nearly unchanged for the day.

The US dollar staged a goodish rebound from the vicinity of its lowest level since July 5 touched the previous day, which, in turn, acted as a headwind for the dollar-denominated gold. This, along with the prospects for a more aggressive move by major central banks to curb soaring inflation, was seen as another factor weighing on the non-yielding yellow metal.

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Gold Futures: Upside looks limited

Open interest in gold futures markets dropped by around 9.6K contracts on Thursday according to preliminary readings from CME Group. Volume, instead, went up for the second session in a row, this time by around 87.4K contracts.

Gold looks supported around $1,680

Thursday’s moderate rebound in prices of the ounce troy of gold was on the back of decreasing open interest, leaving the prospects for further upside somewhat diminished. On the upside, there is a strong support around the $1,680 region, where also converges the 2021 low.

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Gold Price Forecast: XAUUSD to shrug off ECB meeting 

Gold is on standby ahead of European Central Bank (ECB) meeting. Economists at Commerzbank expect the ECB decision to be ignored by the yellow metal.

Gold is popular with central banks as a safe haven and store of value

“We believe that the ECB will decide today to bring its bond purchases to an end at the start of the third quarter. In addition, it is likely to signal fairly clearly that interest rates will be raised at its next meeting in July and that the deposit rate will no longer be negative by the end of September. This would imply that the next rate hike will come in September.”

“We believe it is questionable whether any statement will be made about the longer-term interest rate outlook, as there is still a lack of consensus on this issue within the ECB Governing Council. The hawkish remarks expected from Lagarde are probably already priced in, for the most part, so under normal circumstances, we would not expect any major reaction from the gold price this afternoon.” 

“According to a survey of nearly 60 central banks conducted by the World Gold Council (WGC), about a quarter of central banks are planning to top up their gold reserves in the next twelve months. What is more, the majority of survey respondents expect the proportion of gold in the currency reserves to increase in the next few years.” 

“The WGC says that gold is popular with central banks as a safe haven and store of value. Furthermore, gold is expected to perform better in times of crisis. That said, central banks have been buying considerably less gold of late.”

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Gold Price manages to hold above key support, awaits next catalyst

Gold Price is fluctuating in a tight range near $1,850 on Monday.

10-year US T-bond yield stays flat following last week's rally.

Strong near-term support seems to have formed at $1,840.

Gold Price moves sideways near $1,850 at the start of the week following the sharp drop witnessed on Friday. Trading conditions remain thin due to the Whit Monday holiday in Europe. The US economic docket will not be offering any high-impact data releases and XAUUSD is likely to continue to fluctuate between key technical levels.

Rising US yields limit gold's upside

The US Bureau of Labor Statistics announced on Friday that Nonfarm Payrolls in the US rose by 390,000 in May, surpassing the market expectation for an increase of 325,000. Further details of the report showed that the Labor Force Participation Rate improved modestly to 62.3% and the annual wage inflation edged lower to 5.2% as expected. The US Treasury bond yields shot higher on the upbeat US jobs report and forced gold to erase its weekly gains. The benchmark 10-year yield rose more than 7% last week and snapped a three-week losing streak. At the time of press, the 10-year yield was moving up and down in a narrow channel near 2.95%.

Gold Price could react to ECB, US inflation data

Later in the week, the European Central Bank (ECB) is widely expected to keep policy rates unchanged. The bank is set to hike its policy rate by 25 basis points in July with the Asset Purchase Programme (APP) coming to an end in July. According to Bloomberg, some policymakers want ECB President Christine Lagarde to deliver a convincing message that borrowing costs of vulnerable countries will be contained and fragmentation will not be allowed. A strong reaction in XAUEUR to ECB's policy announcements could impact XAUUSD's movements in the second half of the week.

The most important data release of the week will be the May inflation report from the US on Friday. The Consumer Price Index (CPI) and the Core CPI are forecast to decline to 8.2% and 5.9%, respectively, on a yearly basis. With the NFP data confirming that labor market conditions remain tight in the US, stronger-than-expected CPI figures are likely to trigger another leg higher in US yields and make it difficult for gold to find demand. On the other hand, a retreat in consumer inflation could cause investors to start pricing in a pause in Fed rate hikes in September and help XAUUSD push higher.

Ahead of the above-mentioned key events, XAUUSD could have a hard time making a decisive move in either direction. The market mood seems to have turned upbeat at the beginning of the week. In case risk flows continue to dominate the markets, the dollar could lose interest and help gold hold its ground. In that scenario, however, US yields could gain traction and not allow gold to turn north.

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GBP/USD Price Analysis: Inverted Flag confirms more downside, 1.2400 eyed

The greenback bulls challenge the demand zone, which is placed in a 1.2548-1.2570.

An Inverted Flag formation advocates a follow-up sell-off after a topsy-turvy move.

A death cross, represented by the 50- and 200-period EMAs add to the downside filters.

The pound bulls have displayed a subdued performance in the entire Asian session amid the unavailability of any potential trigger. A phase of topsy-turvy moves in the cable is witnessed after a sheer downside move from a high of 1.2600. The asset experienced intense selling pressure after slipping below the critical support of 1.2558.

On an hourly scale, the GBP/USD pair has formed an Inverted Flag chart pattern that indicates further downside after a rangebound move. Usually, an Inverted Flag dictates the initiation of fresh shorts by those investors, which prefer to execute positions after the establishment of a downside bias. The cable is hovering near the demand zone placed in a 1.2548-1.2570.

A death cross has been displayed by the 50- and 200-period Exponential Moving Averages (EMAs) at 1.2555, which signals more pain ahead.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a bearish range of 20.00-40.00, which adds to the downside filters.

Should the asset drops below Wednesday’s low at 1.2459, the greenback bulls will get strengthened and will drag the asset towards May 20 low at 1.2438. A breach of the latter will open room for more downside to near the round-level support at 1.2400.

On the contrary, an upside move above Tuesday’s high at 1.2630 will trigger an initiative buying action, which will drive cable towards May’s high at 1.2667, followed by the round-level resistance at 1.2700.

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Gold Down as Investors Continue Digesting Hawkish Powell Remarks

Gold was down on Wednesday morning in Asia, with the dollar continuing its retreat from a 20-year high and countering pressure from stronger Treasury yields. Investors also digested the latest hawkish comments from U.S. Federal Reserve Chairman Jerome Powell.

Gold futures were down 0.59% to $1,808.24 by 12:48 AM ET (4:48 AM GMT). The dollar, which normally moves inversely to gold, edged up on Wednesday but extended its decline into a fourth day. Investors’ increased appetites for riskier bets also took the edge off the safe-haven greenback's appeal.

Powell on Tuesday pledged that the U.S. central bank would hike interest rates as needed to curb sky-high inflation that he said threatened the foundation of the economy. The Fed has hiked its interest rate by three-quarters of a percentage point in 2022 to date and is on track to hike it again in half-percentage-point increments at its next two meetings in June and July 2022.

Philadelphia Fed President Patrick Harker will speak, and a G-7 finance ministers and central bankers meeting will take place, later in the day.

In Asia Pacific, Japan’s GDP contracted 1% year-on-year and 0.2% quarter-on-quarter in the first quarter of 2022, while Australia’s wage price index grew 2.4% year-on-year and 0.7% quarter-on-quarter.

Strong U.S. retail sales and factory data for April gave investor sentiment a boost, with consumers purchasing motor vehicles and frequenting restaurants, showing no signs of a slowdown in demand despite high inflation.

In other precious metals, silver and palladium edged up 0.2%, while platinum inched up 0.1%.

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Gold Price Forecast: XAUUSD slides further below $1,800, lowest since late January

Gold attracted fresh selling on Monday and dived to its lowest level since late January.

Signs of stability in the financial markets undermined demand for the safe-haven metal.

Break below the $1,800 accelerated the slide and has paved the way for further losses.

Gold weakened further below the $1,800 mark and dropped to its lowest level since late January during the first half of the European session. Spot prices

Following an early uptick to the $1,818 region, the XAUUSD came under some renewed selling pressure on Monday and prolonged its recent bearish trajectory witnessed over the past one month or so. Modest recovery in the global risk sentiment - as depicted by signs of stability in the equity markets - turned out to be a key factor that undermined the safe-haven gold.

Apart from this, the prospects for a more aggressive policy tightening by the Fed further contributed to driving flows away from the non-yielding yellow metal. The intraday downfall took along some short-term trading stops placed near the $1,800 mark. This further aggravated the bearish pressure surrounding gold, though a combination of factors helped limit losses.

Mounting global growth concern resulting from the war in Ukraine and China's zero-COVID-19 policy has spurred a rally in bonds, which saw the benchmark 10-year yields retreat from the recent peak of 3.20%. This, in turn, kept the US dollar bulls on the defensive and extended some support to the dollar-denominated commodity, allowing spot prices to rebound from the $1,787-$1,785 area.

That said, the lack of any strong follow-through buying and acceptance below the $1,800 round figure marks a bearish breakdown. Hence, a subsequent slide towards the $1,782-$1,780 area, or the 2022 low, en-route the next relevant support near the $1,753-$1,751 zone, remains a distinct possibility. Traders now look forward to the US Empire State Manufacturing Index for a fresh impetus.

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Gold Price Analysis: XAU/USD slides to $1810s, eyes annual lows after fourth successive weekly decline

Gold prices continue to trade with a negative bias in the upper $1810s as the buck remains resilient.

XAU/USD looks on course to post its fourth successive weekly decline and worst weekly performance since June 2021.

With the 200DMA broken, technicians are eyeing support in the form of annual lows around $1780 as the next target.

Spot gold (XAU/USD) prices continue to trade with a negative bias on the final trading day of the week, having hit their lowest levels in more than three months just above $1810 earlier in the session. At current levels in the upper $1810s per troy ounce, gold is trading about 0.2% lower and looks on course to post a weekly loss of around 3.5%, which would mark a fourth successive week in the red and gold’s worst weekly performance since June 2021.

The main driver of gold weakness this week has been the strength of the US dollar, with the Dollar Index (DXY) looking on course to close out the week close to multi-decade highs in the upper 104.00s. A stronger US dollar makes USD-denominated commodities like XAU/USD more expensive for international buyers.

The buck’s resilience on Friday comes despite a rebound in risk appetite which has seen stocks and crypto rally, arguably burnishing gold’s safe-haven appeal. Price action in US bond markets has also been unfavourable for the precious metal this week. While nominal yields (though higher on Friday) look set to end the week substantially lower, real yields are little changed.

That means lower inflation expectations (to be exact, 10-year breakevens have fallen over 20 bps this week to under 2.70%, their lowest since early March), implying a reduced demand for inflation protection. This hurts gold, given the asset is often seen as a hedge against inflation.

Fed chair Jerome Powell’s remarks on Thursday didn’t seem to rock the boat much. He reiterated that he sees 50 bps rate hikes at upcoming meetings as appropriate. Looking ahead on Friday, gold traders will be watching the release of the US University of Michigan Consumer Sentiment survey for May at 1500BST for insights as to how US consumers are holding up in the face of still sky-high inflation.

Any fresh commentary from Fed speakers that might move the needle regarding tightening expectations would also be worth noting. With XAU/USD having broken below its 200-Day Moving Average on Thursday, many technicians predict further downside towards annual lows in the $1780 area.

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XAU/USD at weekly high, bulls awaiting sustained move beyond $1,900

Gold gained traction for the third straight day and climbed to a fresh weekly high on Thursday.

A less hawkish Fed extended support to the metal amid the latest COVID-19 outbreak in China.

The prospects for a further tightening by the Fed revived the USD demand and capped gains.

Gold built on this week's goodish rebound from the $1,850 area, scaling higher for the third successive day on Thursday. The momentum pushed spot prices to a fresh weekly high during the early European session, though bulls struggled to capitalize on the move further beyond the $1,900 round-figure mark.

On Wednesday the Fed increased the Fed Funds rate by 50 bps in the the largest rate hike since 2000, and the beginning of quantitative tightening (QT) – but it downplayed the possibility of further super-size hikes. In the post-meeting press conference, Powell eased market fears about a more aggressive tightening path and said that the Fed was not actively considering a 75 bps rate hike in June. This, in turn, was seen as a key factor that offered some support to the non-yielding yellow metal. Apart from this, concerns about the potential economic fallout from rising COVID-19 cases and strict lockdowns in China benefitted the safe-haven gold.

That said, the markets are still pricing in a further 200 bps rate hike for the rest of 2022, which was evident from a fresh leg up in the US Treasury bond yields. This, in turn, helped revive the US dollar demand and acted as a headwind for the dollar-denominated commodity. This makes it prudent to wait for strong follow-through buying before confirming that gold has bottomed out near the $1,850 region and is positioning for a more robust near-term appreciating move.

Market participants now look forward to the US economic docket, featuring the release of Weekly Initial Jobless Claims later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to gold. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities. 

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 European Stocks Lower; More Russian Sanctions, Aggressive Fed Weigh

European stock markets traded lower Wednesday, weighed by the likely imposition of new Western sanctions on Russia as well as concerns of aggressive monetary tightening by the U.S. Federal Reserve.

By 3:40 AM ET (0740 GMT), the DAX in Germany traded 0.5% lower, the CAC 40 in France fell 0.5% while U.K.’s FTSE 100 dropped 0.1%.

The United States and Europe are set to announce later Wednesday new sanctions to punish Moscow over alleged atrocities in Ukraine, something Ukraine President Volodymyr Zelensky described as "war crimes" in a speech to the United Nations security council.

The European Commission has already proposed new sanctions including banning Russian coal imports and halting trade worth nearly 20 billion euros ($22 billion), and the White House said late Tuesday that its new measures will target Russian banks and officials and ban investment in Russia.

Russia’s invasion of Ukraine and the sanctions already levied by the West as punishment have roiled markets, causing sharp rises in commodity prices, prompting fears of sharply slower growth this year. 

German factory orders fell 2.2% on the month in February in the runup to Russia’s invasion of Ukraine, falling for the first time in four months and underscoring concerns over weaker growth in Europe’s largest economy. 

Also, dragging on the European markets are set to receive a negative handover from Asia and Wall Street after comments from Fed Governor Lael Brainard raised expectations of aggressive interest rate rises by the U.S. central bank, added to by hawkish comments from Fed Governor Lael Brainard, normally seen as one of the more dovish members of the central bank policymakers.

This puts the focus firmly on the release later Wednesday of minutes from the Fed's last policy meeting, with investors looking for clues over the likelihood of a 50 basis point hike at the U.S. central bank's next meeting in May.

In corporate news, Volkswagen (DE:VOWG_p) stock fell 2.7% after the German carmaker’s finance chief Arno Antlitz told the Financial Times that the company is likely to ditch many models by the end of the decade to concentrate on producing fewer cars overall but more profitable premium vehicles.

Vestas Wind Systems (CSE:VWS) stock fell 1.4% after the Danish wind turbine said that it would withdraw from Russia, where the firm has two factories.

Oil prices edged higher Wednesday, with traders having to balance supply concerns on the back of likely new sanctions on Russia with fears of weaker demand after a build in U.S. crude inventories and a prolonged COVID lockdown in Shanghai, the Chinese financial hub.

U.S. crude oil supply data from the industry body American Petroleum Institute, released late Tuesday, showed a build of just over 1 million barrels for last week, compared with the 3-million-barrel draw reported the previous week.

Investors now await official numbers from the U.S. Energy Information Administration later in the session for confirmation.

By 3:40 AM ET, U.S. crude futures traded 0.9% higher at $102.86 a barrel, while the Brent contract rose 1% to $107.67. 

Additionally, gold futures fell 0.4% to $1,919.50/oz, while EUR/USD traded 0.1% lower at 1.0891.

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