GOLD Price Analysis – Sep 18, 2023

Daily Price Outlook

During the first half of the European trading session, the price of gold (XAU/USD) managed to maintain a positive stance for the second consecutive day. It is currently trading around $1,925, showing a slight increase of just over 0.10%. However, this positive performance is mainly due to a modest decline in the US dollar and cautious market sentiment that favors safe-haven assets like gold. Nevertheless, the potential for further gains remains limited as traders are awaiting the upcoming interest rate decisions from major central banks scheduled for this week. These decisions are likely to have a significant impact on the direction of gold prices.

Impact of a Weakening US Dollar on Gold Prices

The broad-based US dollar failed to maintain its upward stance, slipping from its recent six-month high. However, this decline in the dollar is good news for the price of gold. Although the losses in the US dollar might not last long as traders are showing reluctance to take big risks. They prefer to wait for the Federal Reserve's (Fed) upcoming monetary policy update. This cautious approach is keeping the US dollar-denominated price of gold from making significant gains.

It is worth noting that the Fed is set to announce the results of its two-day monetary policy meeting soon, and it's widely expected to keep things as they are. However, the market is still considering the possibility of a minor 0.25% interest rate increase later this year, possibly in November or December.

Therefore, investors will closely watch Fed Chair Jerome Powell's remarks during the post-meeting press conference for hints about future interest rate increases. This will significantly impact the short-term value of the US dollar and could influence the price of gold.

Global Factors Driving Gold Demand

Besides that, the ongoing worries about a possible shutdown of the US government and the worsening property problems in China are supporting the demand for safe-haven precious metals. Specifically, China Evergrande Group has postponed a decision on how to deal with its debt issues, adding to concerns in the market.

Therefore, the news of a potential US government shutdown and China's property crisis has boosted the demand for safe-haven assets like gold. Meanwhile, the uncertainty surrounding these issues has made investors seek refuge in gold, leading to an increase in its price as a result of heightened demand for the precious metal.

This week, investors will also pay attention to decisions from other major central banks: the Swiss National Bank (SNB) and the Bank of England (BoE) on Thursday, and the Bank of Japan (BoJ) on Friday. Additionally, on Tuesday and Wednesday, the latest consumer inflation data from Canada and the United Kingdom (UK) could create trading opportunities for XAU/USD.

GOLD(XAU/USD) - Technical Analysis

Gold demonstrates a pronounced bullish inclination, targeting the $1,929 mark. This aligns with the prospects of persisting positive momentum, with an initial goal set at $1,945.20.

Today's forecast leans towards a bullish stance, bolstered by the price movement above the EMA50. However, this momentum might encounter intermittent lateral shifts influenced by the stochastic downturn.

Conversely, it's pivotal to acknowledge that any inability to surpass $1,929 could instigate a price regression towards the $1,913.15 territory. Today's anticipated trading span oscillates between the support at $1,920 and resistance at $1,945.20.