GOLD Price Analysis – Sep 26, 2023

Daily Price Outlook

Gold price (XAU/USD) failed to stop its losing streak and declined to $1,910 per troy ounce in the early European session on Tuesday. However, the reason for its downward rally could be linked to the ongoing strength of the US Dollar and rising US Treasury yields. Meanwhile, the Federal Reserve's more hawkish stance was seen as another key factor that has been putting downward pressure on Gold prices.

Fed's Inflation Concerns and Strong US Dollar Impacting Gold

It is worth noting that the Federal Reserve recently warned that inflation in the United States is still a concern. This means they might increase interest rates one more time by the end of the year. Furthermore, most Fed officials now expect only two interest rate cuts in 2024, down from the previous estimate of four. Hence, this news, along with strong economic data in the US, suggests that the Fed could make borrowing money more expensive.

Furthermore, Minneapolis Fed President Neel Kashkari even suggested that they might need to keep interest rates high for a while to control inflation. This "hawkish" stance is making the US dollar stronger and causing the price of gold to drop.

The broad-based US dollar has gained significant strength in recent times, with the US Dollar Index (DXY) now hovering near 106.00. This marks its highest level since November. In the meantime, the yield on the 10-year US Treasury note has surged to 4.55%, a level not witnessed since October 2007.

Investors seems worried that higher interest rates could damage the economy by making it more expensive to borrow money. Apart from these worries, the concerns about a housing crisis in China are contributing to instability in the stock markets. Interestingly, this instability was seen as one of the key factor that kept the lid on any additional losses in the gold price.

Government Shutdown Concerns and Gold's Safe-Haven Appeal

US President Joe Biden and one of his top advisers are worried about a possible government shutdown if the federal government can't agree on its budget. This could cut food help for 7 million low-income women and kids. Biden and House Speaker Kevin McCarthy talked about government spending, but the Republican-led House wants cuts. The uncertainty of a shutdown might make people turn to safe assets like gold, which could help prevent a big drop in its price.

Looking forward, investors will closely monitor key economic data like US Consumer Confidence, Durable Goods Orders, Jobless Claims, and the Core PCE Price Index. These releases will offer insights into inflation trends and may affect the Federal Reserve's policies, potentially influencing Gold prices.

GOLD(XAU/USD) - Technical Analysis

The gold price exhibited a discernible downward trajectory yesterday, closely approaching the pivotal support level at $1913.15. Influenced by the negative pressure from the EMA50, there are emerging indications suggesting potential further depreciation should it breach this support.

Given the uncertainty, a wait-and-see approach is recommended until there's a clearer stance regarding the $1913.15 benchmark. A breach could intensify the bearish momentum, potentially steering the price towards targets of $1890.00 and subsequently, $1875.00. Conversely, if it sustains above this level, a resurgence targeting $1945.20 in the short term might be anticipated.

For today, the expected trading range is between support at $1900.00 and resistance at $1930.00.