News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • US House Speaker Pelosi says top-line spending number may change but hopes for $3.5 trillion in spending bill - BBG
  • RBA Minutes: - Board committed to providing high level of monetary support - Q3 GDP expected to decline materially - Central scenario is rates on hold until 2024 - BBG $AUDUSD
  • Heads Up:🇦🇺 RBA Meeting Minutes due at 01:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-21
  • New Zealand reports 14 new local Covid cases - BBG
  • I had a chance to talk with @tastytradeRyan and @victorJ0NES about Evergrande and its impact on US markets — always great talking with these two guys on Mondays. https://t.co/vddTknnPWC
  • RT @cheddar: Stocks dropped the most since May on Monday, sending shockwaves through Wall Street. @CVecchioFX explains the global impact of…
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/EegiwWMe9V
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDdK93P https://t.co/ZE0Hgn9PCM
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePT7Yu8 https://t.co/GFx3b1W0OD
  • RBNZ's Hawkesby talking "considered steps" when setting monetary policy, leaning towards 25bps - With money markets pricing in 31bps worth of tightening at the October meeting. Room for disappointment. https://t.co/C7DHnPIeuU https://t.co/K2835aP57Z
Gold Prices Drop as US Dollar Approaches Fresh 2021 High

Gold Prices Drop as US Dollar Approaches Fresh 2021 High

Thomas Westwater, Analyst

Gold, XAU/USD, US Dollar, Fed Bets, Jackson Hole – Talking Points

  • Gold flips lower after US Dollar energized from FOMC
  • Traders turn to Jackson Hole for further taper clues
  • XAU/USD turns lower after falling EMA pressures prices

Gold prices started to turn lower in Thursday’s Asia-Pacific session as traders across Asia digested recent market news, including the FOMC minutes. The yellow metal is down nearly 2% since the start of August, with pressure from a stronger US Dollar presenting a formidable headwind for prices. The broad-based DXY index, which tracks the Greenback versus a basket of currencies, is nearly 1.5% higher this month. Gold tends to be more expensive to hold for investors when the USD is rising.

Prices have held up better than some may have expected, given the DXY index is at a five-month-high and nearly into a fresh 2021 peak. Some weakness in Treasury yields may help explain that. A series of downbeat economic data have pushed traders to purchase US government debt. Yields fall as bond prices rise. That causes gold to become more attractive to investors, given that gold is a non-interest-bearing asset.

The downbeat US retail sales print earlier this week put a spotlight on fears that the highly transmissible Delta variant may be putting the brakes on economic growth as cases surge across portions of the country. Fed rate hike bets eased slightly on that data. However, Wednesday’s minutes of the Federal Reserve’s July meeting showed that the central bank is on track to roll back asset purchases later this year.

The FOMC minutes appears to have flipped traders bearish on XAU. Balance sheet tapering is seen as a telltale sign for an approaching rate hike. Fed members now appear in favor of reducing asset purchases, or at least talking about it. However, the next FOMC meeting is a ways off on September 21. That puts next week’s Jackson Hole event in focus when Fed Chair Jerome Powell will speak. Gold traders will key in on his commentary. Hawkish tones will likely work against gold prices.

Gold Technical Forecast

Upward momentum eased as gold prices approached the psychologically imposing 1800 level earlier this week. XAU/USD is now on the move lower, with its weekly gains in danger of turning negative. The falling 26-day Exponential Moving Average appears to have helped cap upside. With RSI turning below its neutral 50 midpoint, the path of least resistance may be skewed lower for now.

Gold Daily Chart

gold, xau, xauusd, chart

Chart created with TradingView

Gold TRADING RESOURCES

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES