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
  • Stock markets may be vulnerable to political volatility as China flexes its military might against Taiwan ahead of the Biden-Xi summit. Will reconciliation yield to rockets? Find out from @ZabelinDimitri here:https://t.co/YscFLDpan6 https://t.co/CoJhC9vHpB
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Gold: 0.20% Silver: 0.19% Oil - US Crude: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/HrKCRbsUJP
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.20% 🇳🇿NZD: 0.19% 🇨🇦CAD: 0.15% 🇨🇭CHF: 0.03% 🇬🇧GBP: 0.01% 🇯🇵JPY: -0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/b3hu5OEDFQ
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.58%, while traders in USD/JPY are at opposite extremes with 77.23%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Ghq29hRjlq
  • RT @josh_wingrove: Biden went to Baltimore and gave the biggest update yet on the Congressional talks, said the corporate tax rate won’t ri…
  • Gold prices are under pressure after China growth slowed and New Zealand inflation surged, with investors pricing in more aggressive central bank policy outlooks, which is supporting bond yields.Get your market update from @FxWestwater here:https://t.co/9Jiy8IKqQv https://t.co/7ncLoSYQre
  • Australian Dollar gaining during morning Asia trade after reports crossed the wires that #Evergrande made a bond interest payment Sentiment is cautiously improving, #SP500 futures are pushing higher $AUDUSD #SP500 #AUD https://t.co/vWmn6HJfcd https://t.co/FeEc5HTa31
  • RT @josh_wingrove: Some clarity: President Biden's comment on the tax rate was referring to the challenge of having the votes to raise the…
  • #RBA buys bonds to defend yield target for first time since February -BBG #AUD $AUDUSD
  • #Evergrande pays $83.5m of bond interest due September 23rd -BBG citing SEC Times
XAU/USD Price Forecast: Conflicting Fundamentals Hinder Gold's Recovery

XAU/USD Price Forecast: Conflicting Fundamentals Hinder Gold's Recovery

Daniela Sabin Hathorn, Analyst

Key Talking Points:

  • Fed officials stick to hawkish rhetoric as taper talks intensify
  • XAU/USD continues to trade within key Fibonacci levels

Gold (XAU/USD) is attempting to make a recovery from monthly lows after a hawkish tilt from the Federal Reserve left the precious metal struggling for direction. The current monetary policy was left unchanged as widely expected, even before the risks of Evergrande’s collapse, but Powell and co. stuck to their taper agenda by suggesting that it make come as soon as November if progress continues broadly as expected, although, in typical central bank fashion, they didn’t commit to a specific date.

Another slight change was the dot-plot projections from the last ones published in June, which show that there is an even split between those who think rates will be lifted at the end of 2022 and those who think the first hike will come in early 2023. They also revised higher the inflation expectations for the next three years, as well as real GDP growth in 2022 and 2023.

On average, these changes reflect expectations of a gradual recovery to take place over the next three years rather than a continued recovery for the next 12 to 18 months. The press conference also suggested that the Fed may have been just a vote or two shy from starting tapering at this meeting, which is a more hawkish stance than many were anticipating.

Based on this, the outlook for gold over the next few weeks is slightly dull. The need to invest in gold will diminish as rates rise given how investors will be able to generate a higher return elsewhere, not that XAU/USD has been capable of taking advantage of the recent low-rate environment anyway. Moreover, with the US Dollar picking up, bullion will be less appealing for those holding other currencies. So, all in all, the fundamental picture for gold is not looking too bright.

The only silver lining we may see over the next few days is the unfolding of the Evergrande situation, although the immediate fear and rush to safety seem to have diminished with the injection of 120 billion yuan by the PBOC, a sign that the central bank is looking to clean up the mess slightly. But with two offshore bond payments due to be made on Thursday, and others to follow, we may still have a few days of risk-off sentiment left in markets, which would likely keep XAU/USD supported in the short term.

Advertisement

XAU/USD Daily chart

XAU/USD Price Forecast: Conflicting Fundamentals Hinder Gold's Recovery

Chart prepared by Daniela on Refinitiv

The current trend in XAU/USD seems positive after bouncing off its long-term area of support (1,752 – 1,763) but gold is likely to struggle to find bullish momentum whilst below 1,790, where the 50-day SMA is converging. A break above this area would place buyers in a good position to try and tackle 1,800, at which point resistance is likely to be met on the way up to the 61.8% Fibonacci at 1,834.

XAU/USD Monthly chart

XAU/USD Price Forecast: Conflicting Fundamentals Hinder Gold's Recovery

The monthly chart is showing worsening conditions although the majority of the trading has been kept confined within its key Fibonacci levels. The RSI remains in bullish territory but is tilted to the downside as it heads for the middle of the range, a sign that further bearishness may arise.

Fibonacci Confluence on FX Pairs

Learn more about the stock market basics here or download our free trading guides.

Traders of all levels and abilities will find something to help them make more informed decisions in the new and improved DailyFX Trading Education Centre

--- Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

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

DISCLOSURES