Gold Price Forecast: XAU/USD sits at record highs, China optimism, dovish Fed offset overbought conditions
Gold price off record highs at $2,635 early Tuesday, focus on Fedspeak, US data.
The US Dollar bounces with Treasury bond yields even as risk flows return on China optimism.
Gold buyers refuse to give up despite overbought RSI conditions on the daily chart.
Gold price is moving slightly away from a new record high of $2,635 early Tuesday, replicating the price action seen in Monday’s Asian trading. Traders look forward to a fresh slew of speeches from the US Federal Reserve (Fed) policymakers and the US Consumer Confidence data before placing more bullish bets on Gold price.
Gold price cheers dovish Fed, geopolitics and China stimulus hopes
Despite a modest recovery staged by the US Dollar and overbought conditions on the daily chart, Gold price holds its position close to the all-time high, as buyers refuse to give up on the back of the latest dovish Fed commentaries, increased hopes of Chinese stimulus coming through and escalating Middle East geopolitical tensions.
At the highly-anticipated press conference, People’s Bank of China (PBOC) Governor Pan Gongsheng announced a series of measures to boost the economic recovery, including plans to cut the reserve requirement ratio (RRR) by 50 basis points (bps). Increased expectations that these stimulus measures would stimulate the economy keep the pullback restricted in Gold price. China is the world’s top yellow metal consumer.
In addition, Bloomberg reported that Israel intensified its airstrikes in southern Lebanon, killing about 500 people while injuring 1000. This was the deadliest attack since the 2006 Israel-Hezbollah war. This follows the weekend’s exchange of missiles by both Israel and Hezbollah, as the Middle-East strife seems to translate into a wider regional conflict. Gold price tends to benefit from geopolitical tensions due to its traditional safe-haven status.
Meanwhile, Gold buyers also stay hopeful, as markets are wagering another 50 bps rate hike in November, courtesy of the dovish Fed talks. Fed policymakers continued to advocate the need for more rate cuts amid looming downside risks to the labor market, as inflation continues to move closer to the bank’s 2.0% target. Amongst the Fed officials who spoke on Monday, Chicago Fed President Austan Goolsbee was the most dovish, noting that “many more rate cuts are likely needed over the next year, rates need to come down significantly.”
The focus now remains on Fed Governor Michelle Bowman’s speech and the US Conference Board (CB) Consumer Confidence data for fresh trading incentives in Gold price, as Middle East escalation will be also closely eyed.
On Monday, Gold price recorded a fresh all-time high after a brief retreat, underpinned by a renewed decline in the US Dollar, as markets turned risk-averse on discouraging global business PMI reports. The S&P Global US preliminary Manufacturing PMI contracted further to 47.0 in September, compared to 48.5 expected and August’s 47.9. The Services PMI also dipped to 55.4 in September from 55.7 in August.
Gold price technical analysis: daily chart
As observed on the daily chart, the overbought conditions, as represented by the 14-day Relative Strength Index (RSI) sitting above 70, continue to warrant caution for Gold buyers.
If buyers fight back control, acceptance above the record high of $2,635 is critical to unleashing further upside toward the $2,650 psychological barrier. The next relevant resistance is seen at the $2,700 threshold.
Should the corrective downside gather traction, Gold price will likely test the previous day’s low of $2,613, below which the $2,600 threshold will come into play.
Further south, Gold sellers could target the September 20 low of $2,585.
Gold Price Forecast: XAU/USD sits at record highs, China optimism, dovish Fed offset overbought conditions
Gold price is moving slightly away from a new record high of $2,635 early Tuesday, replicating the price action seen in Monday’s Asian trading. Traders look forward to a fresh slew of speeches from the US Federal Reserve (Fed) policymakers and the US Consumer Confidence data before placing more bullish bets on Gold price.
Gold price cheers dovish Fed, geopolitics and China stimulus hopes
Despite a modest recovery staged by the US Dollar and overbought conditions on the daily chart, Gold price holds its position close to the all-time high, as buyers refuse to give up on the back of the latest dovish Fed commentaries, increased hopes of Chinese stimulus coming through and escalating Middle East geopolitical tensions.
At the highly-anticipated press conference, People’s Bank of China (PBOC) Governor Pan Gongsheng announced a series of measures to boost the economic recovery, including plans to cut the reserve requirement ratio (RRR) by 50 basis points (bps). Increased expectations that these stimulus measures would stimulate the economy keep the pullback restricted in Gold price. China is the world’s top yellow metal consumer.
In addition, Bloomberg reported that Israel intensified its airstrikes in southern Lebanon, killing about 500 people while injuring 1000. This was the deadliest attack since the 2006 Israel-Hezbollah war. This follows the weekend’s exchange of missiles by both Israel and Hezbollah, as the Middle-East strife seems to translate into a wider regional conflict. Gold price tends to benefit from geopolitical tensions due to its traditional safe-haven status.
Meanwhile, Gold buyers also stay hopeful, as markets are wagering another 50 bps rate hike in November, courtesy of the dovish Fed talks. Fed policymakers continued to advocate the need for more rate cuts amid looming downside risks to the labor market, as inflation continues to move closer to the bank’s 2.0% target. Amongst the Fed officials who spoke on Monday, Chicago Fed President Austan Goolsbee was the most dovish, noting that “many more rate cuts are likely needed over the next year, rates need to come down significantly.”
The focus now remains on Fed Governor Michelle Bowman’s speech and the US Conference Board (CB) Consumer Confidence data for fresh trading incentives in Gold price, as Middle East escalation will be also closely eyed.
On Monday, Gold price recorded a fresh all-time high after a brief retreat, underpinned by a renewed decline in the US Dollar, as markets turned risk-averse on discouraging global business PMI reports. The S&P Global US preliminary Manufacturing PMI contracted further to 47.0 in September, compared to 48.5 expected and August’s 47.9. The Services PMI also dipped to 55.4 in September from 55.7 in August.
Gold price technical analysis: daily chart
As observed on the daily chart, the overbought conditions, as represented by the 14-day Relative Strength Index (RSI) sitting above 70, continue to warrant caution for Gold buyers.
If buyers fight back control, acceptance above the record high of $2,635 is critical to unleashing further upside toward the $2,650 psychological barrier. The next relevant resistance is seen at the $2,700 threshold.
Should the corrective downside gather traction, Gold price will likely test the previous day’s low of $2,613, below which the $2,600 threshold will come into play.
Further south, Gold sellers could target the September 20 low of $2,585.
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