GOLD Price Analysis – Sep 06, 2023

Daily Price Outlook

Gold price (XAU/USD) has extended its recent downtrend, marking a third consecutive day of negative performance after touching a nearly one-month high in the $1,952-$1,953 range last week. During the Asian trading session, XAU/USD slipped to a low not seen in over a week but has failed to sustain significant follow-through, currently hovering near the $1,925 mark with a marginal decline of less than 0.10% for the day. However, the decline is primarily attributed to the prevailing hawkish expectations surrounding the Federal Reserve, which are bolstering US bond yields and thereby supporting the US dollar, thus contributing to the decline in gold prices. Nevertheless, a cautious market sentiment may deter traders from aggressively pursuing bearish positions.

Fed's Rate Outlook and Dollar Strength Impacting Gold

It's important to note that the Federal Reserve is expected to keep interest rates higher for a while, which makes the US Dollar stronger and pushes down Gold prices. This also means that US Treasury bond yields stay high, giving more strength to the Dollar and making Gold less attractive. Even though the Fed might pause rate hikes in September, there's still a chance of one more increase later in the year. This maintains high US Treasury bond yields, supporting the Dollar and putting pressure on Gold. However, Gold is finding some support as a safe-haven asset due to concerns about China's slowing services sector affecting global markets.

China's Economic Concerns and US-China Trade Tensions Impacting Gold

Besides this, there's growing concern about China's slowing services sector, with a recent private survey revealing its slowest growth in eight months. Thus, this raises worries about the weakening Chinese economy and makes riskier investments less attractive. In the meantime, the ongoing trade tensions between the US and China could also boost interest in Gold as a safe-haven asset. US Secretary of Commerce Gina Raimondo mentioned that the current tariffs on China won't change until a US Treasury review is completed.

So, it's wise to wait for stronger selling pressure before assuming Gold's recent rebound from its March low has ended and taking aggressive bearish positions on XAU/USD. Traders are now watching the US ISM Services PMI release for potential impact on the USD and Gold's direction.

GOLD(XAU/USD) - Technical Analysis

The price of gold remains on a declining course, approaching the pivotal support mark set at $1,923. This threshold mirrors the broken neckline of the clear double bottom pattern illustrated on the chart, acting as a barrier to further price drops.

The lingering effects of the recently culminated double top pattern are palpable, enhancing the prospects of the gold price declining past the noted support, steering towards our chief target at $1,913.15. As a result, our forecast is inclined towards a bearish trend in the near term. Importantly, if there's a breach of the $1,929 level, it might trigger a price reversal, ushering in a brief recovery with potential intraday upswings aiming for $1,945.20.

For today's trading, we anticipate a range bordered by the $1,913 support and $1,940 resistance, maintaining a bearish stance.