Technical Analysis

GOLD Price Analysis – Sep 27, 2023

By LonghornFX Technical Analysis
Sep 27, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Despite a risk-off sentiment in the market, gold is not finding much support as a safe-haven asset. Gold price (XAU/USD) has failed to stop its three-day losing streak and dropped to its lowest point since August 22. This decline marks the sixth negative move in the past seven days, with the price falling below the $1,900 mark. However, the main reason behind this downward trend appears to be the Federal Reserve's hawkish stance, which is strengthening the US dollar and weighing on the value of gold. In the meantime, the weaker risk tone fails to support the safe-haven XAU/USD.

US Dollar Strength and Its Impact on Gold Prices

The broad-based US dollar has been gaining traction and remained well-bid, reaching its highest value in 10 months. However, this surge comes after the Federal Reserve hinted that they plan to keep interest rates higher for a longer time, making the dollar more attractive. Although, this has not been good news for gold prices, which have taken a hit. It is worth recalling that Fed officials mentioned the probability of another interest rate hike by year-end, which has fueled this upward trend.

At the same time, the growing anticipation of higher interest rates has caused the yield on the 10-year US government bond to climb to levels not witnessed since 2007. This development has pushed down gold prices because investors are turning to assets that offer higher returns, which makes gold less appealing in comparison.

Gold's Unusual Behavior Amid Market Sentiment and Economic Indicators

Despite the cautious mood in the market, gold is not getting its usual boost as a safe-haven asset. However, the latest data from the US shows that in September, consumer confidence hit a four-month low. This drop is causing concerns because it suggests that consumers are feeling the pressure of high inflation and rising interest rates.

Furthermore, the ongoing worries about a possible real estate crisis in China, the world's second-largest economy, are making investors more cautious about taking risks with their investments. These global worries are breaking the usual pattern where gold tends to do well during uncertain times. Investors are adjusting to these complex factors, and it's reshaping the financial landscape in unexpected ways.

Looking ahead, gold traders are keeping an eye on the US Core Personal Consumption Expenditure (PCE) Price Index, a key measure for consumer inflation used by the Fed. This Friday, the annual figure is expected to drop from 4.2% to 3.9%. Traders will use this information to identify trading opportunities and make decisions regarding gold prices.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD(XAU/USD) - Technical Analysis

The price of gold decisively surpassed the $1913.15 mark, stabilizing below it, and has now approached the $1900.00 threshold. This strengthens the interim bearish outlook, setting sights on potential descents to $1890.00, followed by a further decline to the $1875.00 mark.

Given this trajectory, we anticipate a continued decline in the forthcoming sessions, bolstered by the downward momentum exhibited by the EMA50. It's pivotal to highlight that any breach of the $1913.15 level would negate this bearish perspective, prompting the gold price to initiate intraday recovery maneuvers.

For today, the projected trading span is set between a support of $1880.00 and a resistance at $1913.00. The prevailing trend for the day is anticipated to be bearish.



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