Daily Price Outlook
Gold prices (XAU/USD) inched higher during the Asian session on Thursday, marking a potential end to a two-day losing streak that had pushed the precious metal to nearly a three-week low, settling in the range of $1,906 to $1,905. The yellow metal initially made an attempt to recover from its recent losses in the Asian trading hours. However, as the European session began, it faced additional downward pressure, causing it to trade slightly lower, hovering around the $1,900 per troy ounce mark. However, this decline in gold's value is likely attributed to the release of upbeat Consumer Price Index (CPI) data from the United States (US), which has exerted pressure on the precious metal, keeping it near its three-week lows.
Fed Meeting and Economic Data Impact on the US Dollar and Gold Prices
Market participants seems confident that the Federal Reserve will not raise interest rates at its upcoming meeting, as long as there are no big surprises in the US consumer inflation numbers. This makes the US dollar weaker and gives a little boost to the price of Gold price.
According to the US Bureau of Labor Statistics, in August, the Consumer Price Index (CPI) in the US rose to 3.7% from a year ago, slightly higher than expected. The core CPI, which excludes things like food and fuel, increased by 4.3%. This indicates that inflation is still above the desired level, leading to speculation that the Federal Reserve might raise interest rates once more before the year ends. There's a greater than 50% chance this could happen in either November or December. If the Fed does raise rates, it could benefit the US Dollar but might limit the rise in Gold prices. This is something aggressive Gold traders should be careful about.
The US Dollar Index (DXY) is bouncing back, currently trading at around 104.70. This recovery is due to higher US Treasury yields, with the 10-year bond yield sitting at 4.25%. Although, investors are thinking that the US Federal Reserve (Fed) will likely keep its easy-money policies at its September meeting. This cautious approach might put pressure on the US Dollar.
Key Economic Data Releases Ahead: PPI and Retail Sales for August
Looking forward, investors are waiting for the Core Producer Price Index (PPI) and Retail Sales numbers for August in the US. These figures can tell us a lot about how the economy is doing. They'll be especially important for assets like Gold.
GOLD(XAU/USD) - Technical Analysis
The gold price maintains its position below $1,913.15, in anticipation of factors that could reinforce the price's trajectory towards the projected downward trend for the day. This inclination is influenced by the previously established head and shoulders pattern. It's worth noting that our projected targets commence at $1,890.00 and may reach down to $1,873.50.
The 50-day Exponential Moving Average (EMA50) backs the forecasted bearish movement, which will persist as the dominant prediction unless there's a breach surpassing the $1,913.15 mark, further solidified if it surpasses $1,916.80 and sustains above these thresholds.
Today's anticipated trading bandwidth is set between a support level of $1,875.00 and a resistance level at $1,920.00.
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