Gold Price Forecast: XAU/USD remains on the defensive near $1800 mark


Update: Gold struggled to capitalize on the previous day's post-US CPI strong move up from two-week lows and faced rejection near the very important 200-day SMA on Wednesday. The modest intraday pullback dragged the XAU/USD to fresh daily lows during the early European session, though lacked follow-through below the $1,800 mark. A positive risk tone, along with a modest uptick in the US Treasury bond yields, acted as a headwind for the non-yielding yellow metal, though a combination of factors helped limit the downside.

Tuesday's sofer-than-expected US consumer inflation figures eased fears for an earlier tapering by the Fed. Apart from this, worries about the fast-spreading Delta variant and a global economic slowdown extended some support to traditional safe-haven assets, including gold. The market concerns were further fueled by Wednesday's disappointing Chinese macro data, which underscored recent signs of slackening economic momentum in the world's second-largest economy. This, in turn, warrants some caution for bearish traders.

Previous update: Gold prices stall gains near $1,800 after hitting a one-week high on Tuesday. The drop in the US benchmark US Treasury yields supported the current upside movement in the prices the previous day. The movement was primarily sponsored after the softer-than-expected rise in US Inflation data revealed yesterday, which raised the doubts over the Fed’s timeline to taper monetary stimulus.

Weaker equity market and concerns on the rapid spread of the coronavirus delta variant and its impact on the global economic recovery continue to lend support near the lower levels.

Gold takes cues from the major central bank’s views on tapering and economic stimulus. The strength of the US dollar keeps the precious metal gains under check. A higher USD valuation makes gold expansive for other currencies holders.

End of update

Gold (XAU/USD) fades the strongest run-up in a week above $1,800, down 0.15% intraday around $1,801, during Wednesday’s Asian session.

The yellow metal jumped to the week’s high, also broke the monotony surrounding $1,800, after the US Consumer Price Index (CPI) miss clouded Fed tapering concerns the previous day. Even so, a recheck of the details suggests that the inflation figures are high enough to favor Fed hawks when they meet the next week.

The US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months. Fed’s readiness to accept a bit higher inflation figures, terming it ‘transitory’, seems to be at test with almost double YoY figures than the US central bank’s previous target range of near 2.0%.

Following the key data release, the US 10-year Treasury yields dropped the most in a month before recently recovering to 1.29%. It should be noted that the S&P 500 Futures print mild gains by the press time even as the Wall Street benchmarks closed in the red the previous day.

In addition to the re-think over the Fed tapering, covid woes and geopolitical tensions also weigh on the market sentiment, underpinning the safe-haven demand of the US Treasury bonds, which in turn weigh on its yields.

Although the virus numbers from the Asia-Pacific region have eased of late, slower jabbing and doubts over the Delta variant spread challenge the market sentiment. Also weighing on the risk appetite, as well as gold, are hurricanes in the US and political tension in Canada and the Middle East.

Looking forward, gold traders will keep their eyes on the more clues to confirm the next week’s tapering from the Fed. The same highlights Thursday’s Retail Sales and Friday’s Michigan Consumer Confidence. For today, risk catalysts and the US Industrial Production for August, expected to ease from 0.9% to 0.5%, could offer intermediate moves.

Technical analysis

Despite crossing an immediate trading range between $1,782 and $1,804, gold prices failed to provide a daily closing beyond the 200-DMA level near $1,809.

Also challenges the gold buyer is the sluggish MACD and RSI conditions, as well as double tops surrounding $1,834.

Meanwhile, 61.8% Fibonacci retracement of July-August fall, around $1,777, adds to the downside filters, other than the multiple lows marked recently near $1,782.

It’s worth observing that five-week-old horizontal support of around $1,758 will challenge gold bears below $1,777.

Overall, gold remains firmer but needs to cross the 200-DMA for giving controls to the bulls.

Gold: Daily chart

Trend: Pullback expected

Additional important levels

Overview
Today last price 1801.69
Today Daily Change -2.71
Today Daily Change % -0.15%
Today daily open 1804.4
 
Trends
Daily SMA20 1801.04
Daily SMA50 1798.43
Daily SMA100 1816.14
Daily SMA200 1809.09
 
Levels
Previous Daily High 1808.67
Previous Daily Low 1780.73
Previous Weekly High 1830.32
Previous Weekly Low 1782.47
Previous Monthly High 1831.81
Previous Monthly Low 1687.78
Daily Fibonacci 38.2% 1798
Daily Fibonacci 61.8% 1791.4
Daily Pivot Point S1 1787.2
Daily Pivot Point S2 1769.99
Daily Pivot Point S3 1759.26
Daily Pivot Point R1 1815.14
Daily Pivot Point R2 1825.87
Daily Pivot Point R3 1843.08

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD holds steady near 0.6250 ahead of RBA Minutes

AUD/USD holds steady near 0.6250 ahead of RBA Minutes

The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia Minutes released on Monday for some insight into the interest rate outlook. 

AUD/USD News
USD/JPY: Traders set for rocky 2025 on rediverging interest rates, Trump and North Korea

USD/JPY: Traders set for rocky 2025 on rediverging interest rates, Trump and North Korea

The Federal Reserve remains the primary driver of USD/JPY and may halt its rate-cut cycle in 2025. Bank of Japan officials will probably refrain from bigger rate hikes. Wild-card politics are set to stir this currency pair, reflecting a duel of safe-haven currencies. 

USD/JPY News
Gold: Is another record-setting year in the books in 2025?

Gold: Is another record-setting year in the books in 2025?

Gold benefited from escalating geopolitical tensions and the global shift toward a looser monetary policy environment throughout 2024, setting a new all-time high at $2,790 and rising around 25% for the year. 

Gold News
Week ahead: No festive cheer for the markets after hawkish Fed

Week ahead: No festive cheer for the markets after hawkish Fed

US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.

Read more
Bank of England stays on hold, but a dovish front is building

Bank of England stays on hold, but a dovish front is building

Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures