GOLD Price Analysis – Sep 25, 2023

Daily Price Outlook

During the early European session on Monday, the price of gold (XAU/USD) failed to maintain its upward rally and dipped to $1,920 level. However, this drop was mainly influenced by the strength of the US dollar against other currencies. Notably, the broad-based US dollar has been rising for ten weeks and is now around 105.55, close to its highest level since March 2023. However, the increase in the US dollar's value is mainly due to expectations of higher interest rates in the US. It is worth mentioning that the rising interest rates make non-yielding assets like gold less attractive to investors, resulting in a negative outlook for XAU/USD.

US Economic Concerns Amidst Rate Hikes and Inflation

The latest Purchasing Managers Index (PMI) report, released last Friday, raised concerns about the demand in the US economy. These worries follow a series of interest rate hikes and a rise in inflation. According to the latest data, the S&P Global Manufacturing PMI for the US showed a slight improvement, rising from 47.9 in August to 48.9 in September, suggesting a continued contraction in the manufacturing sector. In the meantime, the Services PMI dipped slightly from 50.5 to 50.2, and the Composite PMI also declined marginally from 50.2 to 50.1 in August.

During the latest Federal Open Market Committee (FOMC) meeting, it was decided to maintain interest rates within the range of 5.25% to 5.50%. However, notable discussions during the meeting indicated that the majority of members predict upcoming rate hikes later in the year. Susan Collins and Mary Daly, who preside over the Federal Reserve Banks of Boston and San Francisco, highlighted in their remarks that while inflation seems to be moderating, they believe that additional rate hikes will remain necessary to ensure economic stability and address any lingering concerns.

Therefore, The possibility of upcoming rate hikes by the FOMC may lead to downward pressure on gold prices as higher rates can make non-interest-bearing assets like gold less attractive to investors.

Upcoming US Economic Indicators: Impact on XAU/USD and Gold Prices

Looking forward, traders are closely watching US economic indicators. The Q2 GDP Annualized release on Thursday and the Core PCE Price Index on Friday, expected to dip from 4.2% to 3.9%, will influence XAU/USD dynamics.

GOLD(XAU/USD) - Technical Analysis

The gold price has encountered resistance at the $1929 mark, exhibiting a minor bearish inclination. This trend is influenced by the stochastic indicator, which is gradually shedding its negative momentum. The market awaits a positive catalyst that could propel the price beyond the aforementioned level, aiming for a subsequent target at $1945.20.

For the time being, our outlook remains optimistic unless there's a breach below the $1913.15 threshold and sustained trading beneath it. Penetrating this level could be detrimental, potentially leading the price to further declines targeting $1875.00 in the near term.

Today's anticipated trading bracket is set between a support at $1910.00 and a resistance at $1940.00.