GOLD Price Analysis – Sep 21, 2023

Daily Price Outlook

During the Asian trading hours on Thursday, the price of gold (XAU/USD) experienced a recovery from its recent decline, bouncing back from around $1,928. However, it still faces selling pressure due to the Federal Reserve's decision to keep its benchmark policy rates steady at 5.5% and its hawkish remarks. As the European session begins, gold is hovering around $1,930. Investors are shifting their focus to upcoming US economic data following the Fed's decision, but the Fed's indication of a potential interest rate hike is causing uncertainty and keeping downward pressure on the price of gold.

Fed Holds Rates Steady, Eye on Gold's Path

It's worth noting that the Federal Reserve decided to keep interest rates unchanged at the 5.25-5.50% range during their September meeting. This decision was in line with most expectations, as they are confident in their ability to manage inflation without causing excessive harm to the economy or job market. Fed Chairman Jerome Powell emphasized their goal of reaching 2% inflation and said they're ready to raise rates if needed.

According to the Fed's latest predictions, they might increase rates one more time this year, reaching a range of 5.50% to 5.75%. They also expect rates to stay high through 2024, with a projection of 5.1% by the end of that year. These rising interest rates can make investments in non-yielding assets less attractive, which is not good news for precious metals.

Dollar Strength and Economic Data Focus

The broad-based US dollar, measured by the US Dollar Index (DXY), is on the rise, hitting a six-month high around 105.50. However, this surge is fueled by higher US Treasury yields, now at 4.43%, the highest since 2007. Therefore, the strong dollar makes it less attractive to hold assets like Gold, which doesn't earn interest.

Looking forward, investors are keeping a close eye on US data coming out on Thursday. Traders will be watching the weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, and the change in Existing Home Sales. These reports give us a good picture of the job market, manufacturing, and real estate, which all affect how people feel about the economy.

GOLD(XAU/USD) - Technical Analysis

Despite attempts, gold failed to surpass the $1945.20 mark, resulting in a notable downward reversal. This move decisively breached the $1929.00 support level, settling beneath it. Such a shift negates the anticipated positive trajectory from the inverted head and shoulders pattern, steering the commodity towards potential bearishness in upcoming trading sessions, with an initial target set at the $1913.15 region.

The Stochastic oscillator currently radiates bearish signals, reinforcing the outlook for continued decline. As such, the prevailing sentiment leans bearish unless the price can reclaim and sustain above the $1929.00 level. For today's trading, we anticipate a range between a support at $1910.00 and a resistance at $1940.00.