Daily Price Outlook
The Gold Price (XAU/USD) has continued its upward momentum, finding support through dip-buying activity on Wednesday. During the Asian session, XAU/USD successfully reclaimed the significant $1,900 milestone. Despite these movements, a notable surge in value remains somewhat elusive. This is largely attributed to the prevailing consensus that the Federal Reserve (Fed) will uphold its hawkish stance.
However, the driving force behind this upward rally can be attributed to the retreat of US bond yields, which in turn, exerts pressure on the US Dollar and provides a modicum of support to gold. Moreover, China's ongoing economic challenges have further boosted the demand for the safe-haven appeal of XAU/USD.
Gold (XAU/USD) Faces Pressure from Rate Hike Expectations but Shows Signs of Recovery
In contrast to this, market participants now appear strongly convinced that the Fed will maintain higher interest rates for a more extended period. They've factored in the chance of another 25 basis points increase in rates before this year concludes. This recent anticipation has triggered an increase in US Treasury bond yields, consequently exerting downward pressure on the value of Gold, a non-interest yielding asset. As a result, the Gold price experienced a decline, reaching its lowest point since mid-March, and it was hovering around $1,885 earlier this week.
Although, the combination of supportive factors has helped Gold (XAU/USD) to make a modest recovery. Over the past three days, it's managed to gain some positive momentum for the third day in a row.
It's important to highlight that the yield from the primary 10-year US government bond experienced a slight decline after reaching its highest level in nearly 16 years on Tuesday. This made people decide to take some profits from the US Dollar. When the US Dollar is weaker, it's generally good for Gold, which is priced in US Dollars.
Factors Affecting Gold and USD Ahead of Jackson Hole Symposium
Furthermore, the ongoing concerns surrounding China's economic outlook were also contributing to Gold's appeal as a safe-haven investment during times of uncertainty. This additional factor is bolstering the ongoing recovery in Gold price. Although, traders seems cautious and refraining from significant moves ahead of the Jackson Hole Symposium.
Thereby, investors are closely monitoring the statements of Fed Chair Jerome Powell during the symposium for insights into future interest rate trends. There's a growing perception that the pace of rate hikes might ease in September, potentially impacting both short-term behavior of the US Dollar and influencing Gold's price trajectory.
GOLD (XAU/USD) - Technical analysis
The price of gold encountered substantial resistance from the EMA50, prompting a swift downward rebound and a subsequent test of the crucial support level at $1889.35. Notably, the price managed to consolidate above this level, leading to a bullish rally as it attempts to reestablish the anticipated upward momentum in the intraday context. The confirmation of this positive scenario hinges on the breach of $1897.00, a move that would signal the continuation of the ascent towards our primary target at $1913.15.
Given these conditions, we maintain our outlook for a bullish trend in the coming period, supported by the current favorable overlapping signal from the stochastic indicator. It is imperative to maintain a level above $1889.35 to sustain the anticipated upward movement.
The projected trading range for today is forecasted to span between the support at $1885.00 and the resistance at $1913.15.
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