GOLD Price Analysis – Sep 19, 2023

Daily Price Outlook

Despite the weakening US dollar and cautious market sentiment, the price of gold (XAU/USD) is holding steady above $1,900 during the Asian session on Tuesday. However, the reason for its sluggish performance can be tied to the wait-and-see approach of traders in anticipation of significant central bank meetings. The Federal Reserve (Fed), Bank of England (BoE), and Bank of Japan (BoJ) will announce their interest rate decisions later this week, potentially causing market volatility. As of now, gold is experiencing a minor 0.08% dip, trading at $1,932.

Federal Reserve Meeting and Its Impact on Gold

It is worth noting that the Federal Reserve (Fed) is about to reveal the outcome of its two-day monetary policy meeting on Wednesday, and it's widely anticipated that they will keep interest rates in the 5.25% to 5.5% range. According to the CME Fedwatch Tool, there's a 99% chance they'll maintain the current rates. Nevertheless, investors are being cautious because inflation is rising, and the US economy is doing well. This makes people worried about interest rates going up.

Hence, investors will be closely watching Federal Reserve Chairman Jerome Powell's press conference for seeking clues about future interest rate changes. It's worth noting that when interest rates rise, it can make assets like gold less appealing to invest in. This could potentially hurt the value of precious metals.

Gold's Resilience Amidst Economic Concerns

However, the losses in the gold could be short-lived as worries about a possible US government shutdown and China's worsening property crisis are supporting gold's status as a safe-haven asset. At the same time, the US dollar is losing ground against major currencies, though it's managing to hold above the 105.10 mark. Interestingly, on Tuesday, returns on US Treasury bonds, especially the 10-year ones, slipped to 4.30%. This decrease in bond yields is putting pressure on the dollar, lending additional support to gold. Hence, the bearish US dollar was seen as another key factor that kept the lid on any additional losses in the gold.

GOLD(XAU/USD) - Technical Analysis

Gold's value successfully surpassed the $1,929.00 threshold, concluding yesterday above this benchmark. A meticulous analysis of the chart indicates the completion of an 'inverted head and shoulders' pattern. This pattern hints at potential upward targets exceeding the $1,945.20 level, aiming for the vicinity of $1,960.00.

Given these dynamics, we anticipate a continuation of the bullish trend in the forthcoming phase, bolstered by the EMA50 underpinning the price trajectory. However, it's worth noting that a breach below the $1,929.00 mark could curtail this anticipated ascent, casting a bearish shadow on the intraday perspective.

For today, we forecast a trading range between the support at $1,920.00 and resistance at $1,950.00.