GOLD Price Analysis – Aug 22, 2023

Daily Price Outlook

Gold Price (XAU/USD) has dropped to its lowest point in five months, showing a downward trend. Despite a small positive movement yesterday, it's struggling to recover and remains below $1,900. Traders are cautious, holding back from strong bids as they await more information about the Federal Reserve's upcoming policies. All eyes are on the Jackson Hole Symposium later this week, where Fed Chair Jerome Powell's comments will be closely watched for signals about future interest rate changes.

This will significantly affect the short-term movement of Gold prices. At the same time, as more people realize that the Federal Reserve plans to keep interest rates up for a while, the US Dollar (USD) remains pretty steady.

Fed's Interest Rates and Gold Price Dynamics

It is worth noting that the Fed is expected to stop raising interest rates for now, but some people still think there might be one more increase later. This is because inflation in the US is not completely under control. The US economy seems strong, which makes it likely that the Fed might make policies stricter. These actions make US bonds more attractive and the US Dollar stronger, which affects the price of Gold.

This expectation was influenced by the United States (US) Consumer Price Index (CPI) and the Producer Price Index (PPI), which indicated that the effort to bring inflation back to the Fed's desired 2% target is still ongoing.

Gold Price and China's Economic Concerns

However, despite these developments, the Gold price might find some support due to lingering concerns about economic troubles in China. The recent decision by the People’s Bank of China (PBoC) to implement a smaller interest rate adjustment on Monday, even amidst worries about problems in China's real estate sector, indicates that the Chinese government is not providing extensive support for the economy. This situation has led to a decrease in risk appetite among investors.

GOLD (XAU/USD) - Technical analysis

The price of gold has successfully breached the resistance of the bearish channel, establishing itself above this level and setting the stage for a bullish trajectory in the intraday scope. The focus of this bullish movement is directed towards the initial primary target at $1913.15. It's noteworthy that surpassing this level would signify the continuation of the upward trend, leading to further gains and potentially reaching the levels of $1929.00 and subsequently $1945.20.

Consequently, the prevailing sentiment points towards a bullish trend for today's trading session. A breach of the support level at $1897.00 would facilitate the accomplishment of the aforementioned targets, while breaking below $1889.35 would introduce a negative aspect, prompting the price to revert to a bearish course once again. The projected trading range for today is anticipated to fall between the support level at $1885.00 and the resistance level at $1913.15.