Daily Price Outlook
Gold Price (XAU/USD) succeeded in regaining some strength during the Asian session on Wednesday. It managed to recover from a four-week low in the range of $1,922-$1,923, currently trading just below $1,930.
However, the uptick in gold's price can be attributed to a few factors. The equity markets are relatively weak, and the US Dollar has slightly decreased. These combined factors have provided some support to the value of gold. Moreover, concerns have arisen due to weaker trade data from China, the world's second-largest economy, which has raised worries about its economic outlook.
Adding to this, the recent downgrade of debt ratings for several US banks by Moody’s has prompted investors to seek safer options, benefiting the appeal of the precious metal as a safe-haven asset.
Furthermore, the Gold price was being backed by the weaker US Dollar. The USD Index, which measures the Dollar against other currencies, is currently not very strong, staying below a recent high. This is benefiting Gold because it's priced in dollars. It should be noted that the top official from the Philadelphia Federal Reserve Bank mentioned that they might lower interest rates next year. This has stopped the US Dollar from getting stronger, although the decrease might not be very big. This situation is supporting the Gold price and makes it more appealing to investors.
Market Outlook and Considerations
Looking forward, traders believe the Federal Reserve will keep its tough stance due to the strong US economy. A jobs report showed the job market is good, increasing the chances of a smooth economic slowdown. Fed Governor Michele Bowman also suggested a possible interest rate increase in September or November, boosting the US Dollar.
Traders might wait before acting because of the upcoming US consumer inflation report. This report will influence how the market thinks about future Fed decisions. This affects the US Dollar and decides the next move for Gold's price. So, waiting for clear signs of buying might be smart to confirm if Gold's price has hit a short-term low.
GOLD (XAU/USD) - Technical analysis
The closing of the gold price yesterday displayed a marked downtrend, decisively falling past the $1,929.00 threshold and underscoring the daily candlestick's settlement below it. This bolsters the anticipation of an enduring bearish trajectory, targeting a prominent level at $1,913.15.
The present optimistic inclination of the Stochastic indicator alludes to prospective affirmative trades at today's market commencement. On the flip side, the enduring bearish thrust imposed by the EMA50 emphasizes the probability of sustained bearish trends in the near future.
In summary, our evaluation tilts towards a dominant bearish outlook, driven by the conspicuous double top pattern depicted on the chart. This perspective will undergo reevaluation if the price successfully eclipses the $1,945.20 mark and retains its stature above that benchmark. The forecasted trading range for today is anticipated to hover between a floor of $1,915.00 and a ceiling of $1,945.00.
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