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.

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
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am ET on DailyFX! https://t.co/lxd5fZnn4H
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here: https://t.co/ZJOEtpGUIq https://t.co/tJWOXZCoBw
  • The US Dollar may seesaw as investors navigate what could be a volatile week packed with US GDP data, rising Covid-19 cases, Q3 corporate earnings and more. Get your #currencies update from @ZabelinDimitri here: https://t.co/UNRcd3c9uA https://t.co/BiUiOV4cXC
  • USD/MXN pushes lower towards a critical support level in the midst of continued political uncertainty. Get your #currencies update from @HathornSabin here: https://t.co/HEAzgJJJjg https://t.co/NU9wYbIuni
  • Gold Forecast - via @DailyFX “Gold price outlook still hinges on stimulus deal expectations and corresponding swings in real yields.” What will I have my eyes on in the week ahead? Link to Analysis: https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2020/10/23/gold-forecast-xau-usd-at-the-mercy-of-a-fiscal-stimulus-deal.html $GC_F $XAUUSD $GLD https://t.co/GWEI4d4mMu
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/rxswe1gVL0
  • Talks between the EU and UK restarted today and will continue over the weekend as negotiators from both sides battle against the clock. Get your #currencies update from @nickcawley1 here: https://t.co/ER8IT1yxYO https://t.co/Jeeu2P9mwB
  • The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session overlaps with the New York session. Learn about trading the London forex session here: https://t.co/UTWxbnNz7M https://t.co/W9awqb818J
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/lucvsACxu5
  • 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/UVvf51HiVP https://t.co/yywnE39MLU
Gold Price Forecast: Head-and-Shoulders Formation Takes Shape

Gold Price Forecast: Head-and-Shoulders Formation Takes Shape

2019-09-30 05:00:00
David Song, Strategist
Share:

Gold Price Talking Points

The price of gold appears to be on track to test the monthly-low ($1483) as a head-and-shoulders formation takes shape, but the growing divide at the Federal Reserve may keep the precious metal afloat amid the threat of a policy error.

Gold Price Forecast: Head-and-Shoulders Formation Takes Shape

Gold continues to give back the advance following Federal Open Market Committee (FOMC) interest rate decision, and a more pronounced correction may take shape over the coming days as Fed officials see the benchmark interest rate around 1.50% to 1.75% ahead of 2020.

Image of Fed interest rate forecast

The Summary of Economic Projections (SEP) foreshadow a further adjust in the benchmark interest rate, but it remains to be seen if the FOMC will reverse the four rate-hikes from 2018 as Governor Randal Quarlesinsists that “the US economy is quite solid.”

Recent remarks from Governor Quarles indicate a widening divide at the central bank as the permanent voting-member on the FOMC insists that “we don’t need to be overly concerned about the current level of inflation, that we are a few tenths of a point short of meeting our 2% inflation target.

At the same time, Philadelphia Fed President Patrick Harker voiced his opposition to the back-to-back rate cuts, with the 2020-voting member going onto say that the Fed Fund rate is “probably pretty close to neutral, if not at” neutral.

The comments suggest the FOMC will take a more patient approach than its counterparts in responding to the slowdown in global growth, and fresh data prints coming out of the US economy may encourage the central bank to revert to a wait-and-see approach as the Non-Farm Payrolls (NFP) report is anticipated to show a 145K expansion in September.

Image of Fed Fund futures

With that said, Fed Fund futures continue to reflect a 50/50 chance for another 25bp reduction on October 30, but the growing dissent among Fed officials may push market participants to hedge against fiat-currencies amid the threat of a policy error.

Keep in mind, recent price action warns of a larger correction as a head-and-shoulders formation takes shape, with gold on track the test the monthly-low ($1483) as the Relative Strength Index (RSI) continues to track the bearish formation from June.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

Gold Price Daily Chart

Image of gold daily chart

Source: Trading View

  • The broader outlook for gold prices remain constructive as both price and the Relative Strength Index (RSI) clear the bearish trends from earlier this year, with the precious metal trading to a fresh yearly-high ($1557) in September.
  • However, recent developments in the RSI warns of a near-term correction in gold as the oscillator continues to track the downward trend from June, with recent price action raising the risk for a head-and-shoulders top.
  • In turn, the lack of momentum to hold above the Fibonacci overlap around $1509 (61.8% retracement) to $1517 (78.6% expansion) keeps $1488 (61.8% expansion) on the radar, with a break/close below the stated region raising the risk for a move towards $1468 (50% expansion).

For more in-depth analysis, check out the 3Q 2019 Forecast for Gold

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES