Daily Price Outlook
Gold Price (XAU/USD) failed to stop its long losing streak and remains depressed near its lowest level since June in the Asian session on Tuesday. However, the reason for this decline is the stronger US dollar, supported by expectations of another increase in interest rates by the Federal Reserve. In contrast to this, concerns about the global economy, particularly in China, were seen as one of the key factors that helps the gold price to limit its deeper losses.
Gold Price Influenced by Strong US Dollar and Inflation Challenges
As previously mentioned, the price of gold has been impacted by the strength of the US dollar. The broad-based maintained a robust position, hovering near its peak for a period exceeding two months. This particular situation is proving to be a challenge for the gold market. This is because people are starting to believe that the Federal Reserve (Fed) will keep interest rates high for a longer time. This makes US Treasury bond yields go up, and that's helping the US dollar.
According to recent data from the United States, it seems that the effort to reach the Federal Reserve's 2% inflation goal is still a challenge. The US Consumer Price Index (CPI), which measures the cost of goods for consumers, increased slightly in July.
Meanwhile, the US Producer Price Index (PPI) increased more than expected. This has led to the possibility that the Fed might tighten its policies further. As a result, the interest rate on the 10-year US government bond, an important measure, reached its highest point in nine months on Monday. This also provided some support to the US dollar and contributed to the gold declines.
Gold's Resilience Amid Global Economic Worries and Anticipation of US Data
On the other hand, the increasing concerns about the global economy, particularly in China, are giving a boost to the price of Gold due to its reputation as a safe-haven asset. These concerns gained ground after recent data from China showed that Retail Sales and Industrial Production did not grow as much as people had expected in July. This made investors even more nervous about the state of the economy. Even though China's central bank made surprise interest rate cuts, it didn't make investors feel much better. As a result, the safe-haven Gold is still attractive to them.
Looking forward, people are waiting for US economic news like Retail Sales and the Empire State Manufacturing Index. These, along with US bond yields, could affect the US dollar and Gold prices. The market mood might offer short-term trading chances.
GOLD (XAU/USD) - Technical analysis
The gold price has decisively breached the $1,913.15 level, as evidenced by the daily candlestick's close below this mark. This move has initiated bearish trades, applying pressure towards the $1,900.00 threshold. A further decline is anticipated, with primary targets pinpointed at $1,892.00, and possibly reaching as low as $1,873.50.
The current market sentiment leans towards an ongoing bearish trend in the near term, reinforced by the negative sway of the EMA50 and further highlighted by the manifestation of a double top pattern on the chart. Importantly, any rally beyond the $1,913.15 mark might counteract the present bearish pull and pave the way for short-lived recovery maneuvers.
Today's trading dynamics are forecasted to fluctuate between a support level set at $1,885.00 and resistance situated at $1,915.00.
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