Gold prices are headed for a fifth monthly decline, the longest stretch in four years, after the Federal Reserve raised interest rates, weakening the allure of the non-interest-bearing metal. 

Gold prices are headed for a fifth monthly decline, the longest stretch in four years. This happened after the Federal Reserve raised interest rates, weakening the allure of the non-interest-bearing metal. The strong dollar also affected gold, which is priced in the US currency. The two-year Treasury yield has reached its highest level since 2007.

“Restoring price stability is likely to require maintaining a restrained political position for some time,” Said the US Federal Reserve Governor Powell Friday, in remarks at the Federal Reserve’s annual policy forum in Jackson Hole, “Historical record warns severely from the policy of premature mitigation,”  he added.

He reiterated that another “unusually large” increase in the benchmark lending rate may be appropriate when officials meet next month. However, he did not commit to one, saying the decision will depend on “the totality of incoming data and changing expectations.”

Commenting on the market performance, John Finney, director of business development at Sydney-based bullion dealer Guardian Gold Australia, said that “This has to be the most hawkish rhetoric from the Fed chair at some time.”

“Although gold is under pressure from the strength of the US dollar at the moment, if we see an increase in volatility in the US stock market, we can expect gold to receive a safe-haven bid,” he added.

Meanwhile, Senator Elizabeth Warren took aim at the Federal Reserve’s anti-inflation game plan on Sunday, saying she was concerned the central bank could push the US economy into recession.  The senator remarked that she did not believe an interest rate hike could contain current price pressures.

The DXY US dollar index rose to its highest level in 20 years, making gold priced in US dollars expensive for those holding other currencies.

Matt Simpson, chief market analyst at City Index, said gold’s momentum has shifted to the downside, and while there will be a safe haven influx at some point, investors are currently focused on keeping interest rates high.

Echoing the Fed’s position, ECB Governing Council member Isabel Schnabel said central banks must act aggressively to combat inflation, even if it drags their economies into recession. While gold is often considered a safe haven during financial uncertainties, it is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while strengthening the dollar.

Gold Forecast:

According to gold experts. Gold is likely to head towards $1,700 and has room to go to $1,680. You can get some buyers stepping in around $1,680 to support the market and back to $1,750 again. Data from the US Commodity Futures Trading Commission showed that speculators reduced their net long positions in Comex gold by 15,910 contracts to 30,326 in the week

Today’s Gold Price Analysis:

The continued strength of the US dollar impedes any efforts and attempts for the gold price to recover. Therefore, it is expected that the downward pressure for the gold price will continue until the announcement of US job numbers, the main driver of the markets. Stronger readings would support the dollar and negatively affect gold and vice versa. Until then, it may test new buying levels, the strongest of which are currently 1716 dollars and 1675 dollars, respectively. Whatever the buying opportunity, we do not advise taking any risks.

On the upside, there will be no real change to the current trend without the gold price testing the psychological resistance level of $1800 an ounce.

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The price of gold maintained an advance as investors weighed on expectations for the path of the Federal Reserve’s monetary policy tightening after new data indicated some weakness in the US economy. Yesterday, bullion prices cut six consecutive days of declines with the decline of the dollar. The price of gold XAU/USD moved towards the level of 1754 dollars an ounce, after prices plunged towards the support level of 1728 dollars an ounce at the beginning of the week’s trading.

The rebound came as investors await the annual meeting of global central bankers in Jackson Hole later this week and Federal Reserve Chairman Jerome Powell’s speech on Friday. Commenting on this, Goldman Sachs chief economist Jan Hatzius said he expected Powell to make the case for a slower rate hike. However, Minneapolis Fed President Neil Kashkari said it was “very clear” that the US central bank should tighten monetary policy again to control inflation.

Investors are assessing the strength of the Fed to continue raising interest rates in the face of increased risks to growth. Economic activity has weakened from the United States to Europe and Asia, fueling fears that price hikes and the war in Ukraine will push the world into recession. While bullion has stabilized ahead of the Jackson Hole seminar, Avtar Sandow, Senior Director of Commodities at Philip Nova, said, “The US dollar index remains at multi-year highs affecting its weight not only on gold prices but also on other currencies.”

Stock Futures are Lower

Today, Asian stock index and US stock futures are lower as investors assess the potential pace of further Fed monetary tightening and growing signs of an economic slowdown. The region-wide stock market was down about 0.5%, led by declines in China and Hong Kong, as shares of Logan Group Co. A volatile stock price once again highlights the real estate crisis affecting the Chinese economy.

The recession was fueled by broader risk aversion which saw declines in the S&P 500, Nasdaq 100 and European futures contracts. Risk-sensitive currencies such as those in Australia and New Zealand declined. The 10-year Treasury yield remained above 3%. The latest data has shown weak economic activity from the US to Europe and Asia, underscoring the delicate task the Fed faces in raising interest rates to bring down high inflation without triggering a recession. In general, investors will flock to Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole on Friday to see how tough the US central bank is in the face of mounting economic challenges. The global recovery in stocks from the June low was halted before the much-anticipated event.

Today’s XAU/USD Gold Price Forecast:

• Despite the recent rebound, the XAU/USD gold price is still within the bearish trend.
• A strong reversal of the trend will not occur without the gold price moving towards the $1800 psychological resistance again.
• According to the performance on the daily chart below, I see that the price of gold may enter into buying levels from the support levels of 1725 and 1700 dollars, respectively.
• The price of gold may remain under pressure until the reaction, which will be mentioned in the Jackson Hole symposium, which is organized by the US Central Bank.

The price of gold today will be affected by the level of the US dollar and the extent to which investors take risks or not, as well as the reaction from the announcement of US durable goods orders and pending US home sales.

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The price of gold may remain under pressure until the Jackson Hole symposium.

• Gold futures continued their longest losing streak since July, as the rise of the US dollar led to the decline of the yellow metal at the beginning of this week’s trading.
• The price of XAU/USD fell to the support level of $ 1728 an ounce, the lowest for the price of gold in nearly a month.
• Investors had been expecting more hawkish comments from the Federal Reserve, reducing the prospects for a slowdown in tightening efforts.
• The price of the precious metal is retreating from a weekly loss of 2%, which adds to its performance since the beginning of the year 2022 to date by about -4.5%.

As for the price of silver, the sister commodity to gold, it is also retreating and tumbled to $ 18,835 an ounce. The price of the white metal fell more than 6% last week, exacerbating its horrific performance in 2022 by 19.35%. Since investors priced interest rates at around 3.5% by the end of the year, gold prices have become a victim in this market. Several US Federal Reserve officials dismissed the market’s suggestion that the central bank might start cutting interest rates in the face of slowing growth. The aggressive nature of the Federal Reserve has bolstered the US currency. The US Dollar Index (DXY), which measures the value of the US currency against a basket of major currencies, rose to 108.41, and a strong dollar is bad for dollar-priced commodities because it makes it more expensive to buy for foreign investors.

Commenting on the performance, Han Tan, Senior Market Analyst at Exinity said: “Precious metals are fading as the burning US dollar continues its quest to return to recent highs, as markets regain their bets on the Fed and the tightening path.”

The US Treasury market was also higher overall, with the benchmark 10-year yield unchanged at 2.989%. One-year yields rose 6.4 basis points to 3.307%, while 30-year yields rose 0.1 basis points to 3.226%. The spread between the two-year and 10-year bond yields is stable at -31 basis points.

Relative to the prices of other metallic commodities, the price of copper fell to $3.6315 per pound. Platinum futures fell to $861.30 an ounce. Futures contracts for palladium fell to $ 2004 an ounce.

All eyes on Federal Reserve

Overall, gold traded at its lowest level in more than three weeks as Federal Reserve officials reiterated their commitment to tighten monetary settings to curb inflation. Bullion prices capped their first weekly decline in five as investors weighed optimistic statements by policy makers that warn of a rise in US interest rates. Richmond Fed President Thomas Barkin said Friday that the US central bank is determined to return inflation to its 2% target, even if that means risking a recession in the US.

All eyes will be on Federal Reserve Governor Jerome Powell when he speaks Friday at the annual meeting of central bankers in Jackson Hole. He is expected to reiterate the Fed’s determination to continue raising interest rates to control inflation, though he may stop indicating how senior officials will go when they meet next month.

High interest rates weigh on non-interest bearing bullion. Investor demand has faltered, with holdings in exchange-traded funds falling for the 10th consecutive week, according to preliminary data compiled by Bloomberg. Ravindra Rao, Head of Commodity Research at Kotak Securities Ltd. ETFs, said ETFs showed modest buying interest on Friday “the price of gold may remain under pressure as we see a shift from riskier assets to the safety of the US dollar.” He said investors were re-entering.

Today’s XAU/USD Gold Price Forecast:

Bears control over the gold price direction is still the strongest, and the recent losses pushed the technical indicators on the daily chart towards oversold levels. Therefore, it is possible to think about buying gold from the following support levels of 1715 dollars and 1685 dollars, respectively. The uptrend for the XAU/USD price will not return without moving towards the top of $1800 an ounce. The price of gold may remain under pressure until the Jackson Hole symposium.

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• Spot gold markets have fallen roughly ½% for the trading session on Friday, as we are threatening the $1750 level.
• The market is likely to continue to see a lot of noisy behavior.
• Need to be paying close attention to the bond yields in America and other major economies as gold is highly sensitive.

Furthermore, it’ll be interesting to see how next week plays out due to the fact that the central bankers are all meeting at the Jackson Hole Symposium. There will be a lot of talk about fighting inflation, which should continue to put pressure on the upside on bond yields. It’s much easier to own bonds and earns a yield than it is to hold gold and store it which of course has costs involved. In other words, this is a market that has a lot to look at next week.

If we do break down below the $1750 level, it’s likely that the market will go to the downside and look toward the lows at the $1680 level. The $1680 level underneath should be supported, as we have bounced so hard from there. If we were to break down below there, then the market is likely to go down to the $1600 level. This would almost certainly accompany a strengthening US dollar, so pay close attention to the US Dollar Index. Higher interest rates will cause a chain reaction in this market.

If the market were to turn around and rally from here, I think there is a significant amount of resistance above, especially near the $1800 level. That’s an area that has a lot of market memory built into it, as it had been massive support previously. I think that this is going to be a “pay the rally” type of situation, at least until we can break above the 200-Day EMA. We have a long way to go before we go there, and therefore it’s likely that you would see more of a “fade the rally” type of attitude going forward. Remember that the US dollar is like a wrecking ball against most assets, and of course, gold won’t be any different. Expect volatility, and keep your position size reasonable, as the noise in this market can be very challenging to say the least.

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We have a bit of exhaustion coming into the market, so it makes sense that we would see the market give back some of the recent gains.

• The gold markets have pulled back again on Tuesday as we are now below the $1780 level.
• Ultimately, this is a market that I think will continue to show bits and pieces of hesitation, but whether or not it breaks down completely might be a completely different question. After all, gold markets have seen a nice rally as of late.

Noisy Behavior Ahead

However, you also have to keep in the back of your mind that the candlestick from the Monday session was a massive outsized candle and that typically gets a little bit of follow-through if nothing else. The market will continue to see a lot of noisy behavior, because of everything that’s going on in the bond market. Keep in mind that the bond market drives where the gold market will go most of the time, and that has certainly been the case for the last several months.

The gold markets are difficult to trade unless you are keeping an eye on the 10-year yield because if you have the ability to pick up the yield on a piece of paper, you don’t have to pay for storage when it comes to gold. Because of this, you must keep an eye on both charts. Furthermore, you need to keep an eye on the US dollar, because it has a major influence on where we get on, as gold is priced in those very same US dollars.

The candlestick for the trading session on Tuesday was negative, although it certainly was a lot less negative than the previous one. There is a certain amount of support to be found near the $1750 level, so I think we ought to pay close attention to it, because if we break down below that level, then it opens up a move quite a bit lower. On the other hand, if we were to turn around and break above the $1815 level, that could kick off the next move higher, perhaps looking to chase the 200-day EMA above, presently near the $1845 level. At this point, the entire trading world is all about interest rates and bond markets, so you need to pay attention to these yields more than anything else. Ultimately, it does look like we have a bit of exhaustion coming into the market, so it makes sense that we would see the market give back some of the recent gains.

 

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The price of gold fell after the largest decline in a month, as investors sought to buy the US dollar, amid increasing signs of an economic slowdown. Accordingly, bullion prices took a downward movement, and the XAU/USD gold price reached the support level of 1772 dollars an ounce before settling around the 1777 dollars an ounce before important data and events affecting the market direction and investor sentiment.

Gold is now being sold after rising for four weeks, as the US currency renewed its rise. The latest US data showed a rapid decline in manufacturing and lower homebuilders’ morale, adding to concerns about risks to global growth after the weak numbers from China.

The softness in China prompted the country’s central bank to make a surprise interest rate cut, as the Federal Reserve tightens its anti-inflation policy. This enhanced the attractiveness of the US currency while distorting the attractiveness of gold. Global holdings in bullion-backed exchange-traded funds have shrunk over the past nine weeks.

Where is Gold headed next?

Gold’s next move could hinge on the minutes of the Federal Reserve’s July meeting, which is scheduled for Wednesday. It may provide clues to the scale of the next rate hike. Ahead of its release, economist Nouriel Roubini warned that markets expecting a pivot and a Fed rate cut in 2023 “looks delusional.” Gnanasekar Thiagarajan, Director of Commtrendz Risk Management Services, said the hawkish Fed is still capping gold, which explains why it has failed to hold above $1800 an ounce convincingly. The bullion price is expected to trade between $1,760 and $1,795 in the upcoming sessions.

Before the announcement of the content of the Federal Reserve minutes, Dess, the White House economic adviser, says the US economy faces “a lot of uncertainty” in the coming year. That’s a global threat, but it must be backed by a strong labor market and new legislation. Dess added that President Joe Biden’s bill to be signed on Tuesday would provide tax subsidies for green energy and healthcare purchases that would help stabilize the US economy.

“The balance of power is with David Westin,” Diess added in an interview on Bloomberg TV, “and there’s clearly a lot of uncertainty on the 6- to 12-month horizon.” “We remain very focused on some of the global threats we face including energy markets, and the second-order effects of the war in Ukraine.” However, Dess said fears of the country entering a recession due to high inflation were met by positive economic data, including a 3.5% unemployment rate and an industrial production rate for July that beat expectations. “There is no doubt that we are in a transitional phase,” he said. “It is a transition that our economy needs to reach this more stable growth.”

Dess also said that data showing a slowing housing market was the “intended result of the Fed’s aggressive efforts” to keep inflation in check. “This is where you might see the tightening happening in the most direct way because of the effect on mortgage rates and that effect on economic activity.”

XAU/USD Gold Price Forecast Today:

• The XAU/USD gold price may continue to move in a narrow range until the announcement of factors stimulating investor sentiment today.
• It is represented by the announcement of British inflation figures and the growth rate of the Eurozone economy, then the announcement of US retail sales numbers and the content of the minutes of the last meeting of the Federal Reserve.
• The psychological resistance of 1800 dollars is still the key to crossing the bulls towards stronger ascending levels because it stimulates more technical purchases after that, the targets will be 1818 and 1835 dollars, respectively.

On the downside, breaking the support level of 1772 dollars will support the move towards the next support 1760 dollars, and from it and from the lowest of it, I prefer to think of buying gold again.

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The price of gold fell after four consecutive weeks of gains as investors assessed the outlook for the hawkish path of the Federal Reserve and on further indications that China is struggling to recover. The price of XAU/USD gold declined at the beginning of this week’s trading, towards the support level of 1773 dollars for an ounce, starting from the psychological resistance of 1800 dollars. The price of gold is stable around the level of 1780 dollars at the time of writing the analysis.

Gold bullion prices fell, after the longest streak of weekly gains in nearly a year. The price of the precious metal has risen amid slowing inflation in the US, supporting the argument that the Fed is less aggressive in raising borrowing costs. China’s central bank unexpectedly cut its key interest rate as it ramped up its support for an economy wracked by virus lockdowns and a deepening property crisis.

Economic data released on Monday showed that the country’s recovery is faltering, which could lead to a decline in physical demand for gold in the world’s largest consumer.

Investors will look forward to the release of the minutes of the Federal Reserve’s July meeting on Wednesday, which may provide clues to conditions that could push the US central bank to tighten again in September. Bets in the financial markets on the size of the next increase ranged between 50 and 75 basis points. Richmond Fed President Thomas Barkin said Friday that the US central bank needs to keep raising interest rates until inflation is on track with its 2% target, even if the economy weakens, to avoid a policy error similar to the 1970s.

How will inflation affect gold?

Inflation in the US is likely to remain elevated in the fourth quarter, which could lead to some headwinds in the near term for gold, although the worst is likely over, said Yeap Jun Rong, market analyst at IG Asia Pte. “Today’s drop could be due to some profit-taking as markets may have already largely priced the inflation-peak narrative.”

Investors are also watching a two-day visit by a US congressional delegation to Taiwan, which risks keeping tensions with China high after House Speaker Nancy Pelosi’s visit earlier this month.

Gold price forecast today:

Despite the recent sales, the price of gold can still rise.

• Stability above the resistance of $ 1780 an ounce supports the movement of the bulls towards the psychological resistance of $ 1800 an ounce, which supports the upward trend of the XAU/USD price.
• The continuation of the current selling operations may push the price of gold towards new buying levels and the closest to it currently 1760 and 1745 dollars, respectively.
• We prefer buying gold from every bearish level, despite the tendency of global central banks to tighten their policy, which is negative for gold.
• It finds momentum from the increase in global geopolitical tensions.

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Once we do get a move, it could be rather sizable and profitable for those who are patient enough to wait for it to show itself.

• Gold markets rallied a bit on Friday to reach toward the $1800 level in the spot market.
• It’s worth noting that we have seen a lot of selling pressure in this area, so it does suggest that we are going to see a big fight on our hands.
• It’s also worth noting that this market has a high sensitivity to interest rates, something that a lot of people are focusing on right now.

The Future of Fed Monetary Policy

There’s a big argument right now between traders as to whether or not the Federal Reserve is going to continue to tighten monetary policy in the face of significant inflation. The Federal Reserve has stated repeatedly that they are in fact going to do so, but Wall Street does not seem to believe that. They have caused a massive squeeze on certain risk assets under the idea that the Fed will eventually bend their way. If the Fed does in fact end up loosening monetary policy, that is good for gold. Looking at the interest rate markets, it appears that a lot of people believe they will.

That being said, there’s also the possibility that perhaps people are buying bonds for the fact that they see a recession coming. We have a lot of crosscurrents at the same time, so it’s difficult to imagine that the trade in gold is going to be simple. However, I have a couple of levels that I am paying close attention to, beginning with the $1815 level. If we can break above that level, then it’s likely that the market could go looking to reach the 200-Day EMA.

On the other hand, if the market were to break down below the 50-day EMA underneath, then it opens up a lot of selling pressure. The $1750 level underneath could be a significant support level, as it had been a previous resistance barrier. In this scenario, we would probably see the US dollar pick up quite a bit of strength as well. Overall, I think we are at the major inflection point and will have to watch where the next squeeze comes from, and which direction it kicks often. Once we do get a move, it could be rather sizable and profitable for those who are patient enough to wait for it to show itself.

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In the short term, it looks like a pullback is more likely than not, so I would not be surprised to see traders take profits heading into the weekend.

• The gold markets have gone back and forth during the session on Thursday, as we are sitting just below the $1800 level.
• Keep in mind that the gold markets have hit a major area of resistance, and it would make a certain amount of sense that “market memory” comes into the picture.
• If we break down the 50 Day EMA underneath, then it could open up further selling.

 

Looking at the bond market, interest rates had dropped quite significantly, and that makes gold much more attractive as yields in the paper market do not offer as much of a return. That being said, I would be a bit hesitant to jump into this market right away, because there’s so much noise in the bond market. After all, the bond market drives everything, as it can give you an idea as to whether or not there is a lot of risk-taking out there, or if people are running for safety.

The one nice thing about the candlestick during the day on Wednesday is that breaking above it is a clear sign of strength, and a lot of people would probably jump into the market at that point. The $1800 level of course is a large, round, psychologically significant figure, and it would attract a lot of headline noise. However, it’s not really until we break above the $1815 level that we clear all of that. If that happens, I would anticipate the gold would go looking to the 200-Day EMA.

On the other hand, breaking down from here could open up and move down to the $1750 level, which is an area that previously had been resistant. In general, when you look at this market you can see that there has been a lot more volatility as of late, and it suggests that we are in fact going to continue to see noisy behavior, perhaps a pullback. We are still very much in a downtrend, and you should keep that in the back of your mind. If yields start to rise again, that will put a lot of downward pressure on gold, just as the opposite could send it higher. In the short term, it looks like a pullback is more likely than not, so I would not be surprised to see traders take profits heading into the weekend.

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The decline in US inflation rates, stronger than expected, negatively affected the path of expectations of raising US interest rates in the coming months. Yesterday’s numbers caused the US dollar to decline, and therefore the XAU/USD gold price had the strongest opportunity to rebound higher with gains to the resistance level of 1807 dollars per ounce, the highest for the price of gold in more than a month. The price of gold XAU/USD is stable around the level of 1786 dollars an ounce at the time of writing the analysis.

Stock Market Analysis

Stock markets extended their rally Thursday after weaker-than-expected US inflation data fueled speculation that the Federal Reserve may switch to a slower pace of interest rate hikes. Accordingly, the European Stoxx 600 Index advanced for a second day, after rising to a two-month high after the CPI report, with technology and construction stocks outperforming. US futures rose after the S&P 500 reached a three-month high and the Nasdaq 100 pulled back 20% above its June low.

Technology stocks fueled a 1% rally in the Asian stock index. China’s bourses advanced even as investors digested its central bank’s warning about inflation threats and vowed to avoid massive stimulus.

The price of the US dollar stabilized after the previous day’s decline, which was the largest since the beginning of the epidemic. Short-term Treasury yields were lowered as investors’ expectations of how aggressively the Federal Reserve would be able to tighten monetary policy. According to official figures, the headline inflation rate in the United States reached 8.5% in July, down from June’s reading of 9.1% which was the largest in four decades. Price pressures remain severe and Fed officials were quick to stress that more US interest rate hikes are on the way. They also indicated that investors should rethink expectations for cuts next year to support economic growth.

The question is whether the recovery in global stocks and other riskier investments from this year’s defeat can continue against this backdrop.

According to US Central Bank officials:

Minneapolis Fed President Neil Kashkari said he wants the Fed’s benchmark interest rate at 3.9% by the end of this year and 4.4% by the end of 2023. Referring to market pricing of the Fed’s policy trajectory, Kashkari said it’s not realistic to conclude The Federal Reserve will start cutting US interest rates early next year when inflation is very likely to exceed the 2% target.

For his part, Charles Evans, his counterpart in Chicago, said that inflation remains “unacceptably high” and that “we will increase rates the rest of this year and into next.”

Swaps pointing to the September Fed meeting brought the US interest rate back by half a point again in exchange for a larger move. A major part of the Treasury yield curve remains deeply inverted, a pattern widely believed to indicate the risk of a recession.

XAU/USD Gold Price Forecast Today:

• The stability of the gold price will remain above the psychological resistance of 1800 dollars an ounce, supporting the bulls’ control over the direction of gold.
• It will support the price movement towards stronger ascending levels, and the next. If this occurs, it will be the resistance levels of 1818 and 1832 dollars, respectively. 
• The movement of the XAU/USD gold price below the support level of 1770 dollars an ounce will have an important impetus for the bears’ move, and in general, I still prefer buying gold from every descending level.

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