Gold Price Forecast: XAU/USD recaptures key 21-day SMA, as buyers refuse to give up
Gold price looks to extend the bounce from three-week lows ahead of US PPI data.
The US Dollar gives back US CPI-led uptick amid employment concerns, hawkish Fedspeak ignored.
Gold price finds footing again above 21-day SMA at $2,627, more recovery likely?
Gold price is looking to build on the previous recovery from three-week lows of $2,604 early Friday. Broad risk aversion and a modest US Dollar (USD) downtick support Gold price heading into the US Producer Price Index (CPI) data release due later on Friday.
US jobs worries outweigh hot inflation, lifting Gold price
Gold price continues to cheer the unfazed odds of a 25 basis points (bps) interest rate cut by the US Federal Reserve (Fed) in November. Markets currently price in about an 86% chance of such a move next month, according to the CME Group’s FedWatch Tool.
The health of the US labor market remains a concern for investors after Initial Jobless Claims surged by 33,000 last week to a seasonally adjusted 258,000 for the week ended October. 5. Discouraging US jobs data overshadowed the hot Consumer Price Index (CPI) inflation data for September, keeping the November rate cut hopes alive and kicking.
US annual CPI inflation dropped from 2.5% in August to 2.4% in September, the lowest level since February 2021, although still came in above the estimated 2.3% print. The CPI increased by 0.2% over the month in September, matching August’s increase and surpassing 0.1% expectations.
Therefore, the US Dollar failed to sustain its recovery momentum and pullback from two-month highs against its major rivals, as short-term two-year US Treasury bond yields tumbled. This helped Gold price stage a comeback from multi-week troughs.
The USD retracement was partly sponsored by the USD/JPY slide, fuelled by hawkish comments from Bank of Japan (BoJ) Deputy Governor Ryozo Himino, who said on Thursday that “if the outlook for economic activity and prices presented in the July report is achieved, the BoJ will accordingly raise interest rates.”
Late Thursday, slightly hawkish commentary from Atlanta Fed President Raphael Bostic was unable to lift the sentiment around the Greenback, leaving the buck on the back foot ahead of Friday’s US PPI inflation data.
Bostic said in a Wall Street Journal (WSJ) interview that he would be “totally comfortable” skipping an interest-rate cut at an upcoming meeting of the US central bank. He added that the “choppiness” in recent data on inflation and employment may warrant leaving rates on hold in November.
The dovish sentiment around the Fed rate cut expectations could be tested on the US PPI report, significantly impacting the value of the US Dollar and Gold price. The US PPI is seen easing to 1.6% YoY in September while the annual core PPI inflation is set to rise to 2.7% in the same period, against a 2.4% growth reported previously.
Gold price could continue to draw support from increased optimism about China’s fiscal stimulus package due to be rolled out on Saturday. Meanwhile, speeches from several Fed policymakers will also keep Gold traders entertained.
Gold price technical analysis: daily chart
Buyers refused to give up on Thursday and jumped back into the game even after Gold price closed Wednesday below the key 21-day Simple Moving Average (SMA) support, then at $2,619.
Gold price recaptured the 21-day SMA support-turned-resistance, now at $2,628, on a daily closing basis on Thursday, reviving the uptrend.
The 14-day Relative Strength Index (RSI) looks north above the 50 level, suggesting that there is scope for more upside.
The next bullish targets for Gold price are seen at the $2,650 psychological barrier and the intermittent highs near $2,670.
On the downside, the immeddate support is seen at the three-week lows near the $2,600 threshold. A sustained break below the latter could extend the downside toward the September 20 low of $2,585.
Further declines could challenge the $2,550 demand area, where the 50-day SMA aligns.
Gold Price Forecast: XAU/USD recaptures key 21-day SMA, as buyers refuse to give up
Gold price is looking to build on the previous recovery from three-week lows of $2,604 early Friday. Broad risk aversion and a modest US Dollar (USD) downtick support Gold price heading into the US Producer Price Index (CPI) data release due later on Friday.
US jobs worries outweigh hot inflation, lifting Gold price
Gold price continues to cheer the unfazed odds of a 25 basis points (bps) interest rate cut by the US Federal Reserve (Fed) in November. Markets currently price in about an 86% chance of such a move next month, according to the CME Group’s FedWatch Tool.
The health of the US labor market remains a concern for investors after Initial Jobless Claims surged by 33,000 last week to a seasonally adjusted 258,000 for the week ended October. 5. Discouraging US jobs data overshadowed the hot Consumer Price Index (CPI) inflation data for September, keeping the November rate cut hopes alive and kicking.
US annual CPI inflation dropped from 2.5% in August to 2.4% in September, the lowest level since February 2021, although still came in above the estimated 2.3% print. The CPI increased by 0.2% over the month in September, matching August’s increase and surpassing 0.1% expectations.
Therefore, the US Dollar failed to sustain its recovery momentum and pullback from two-month highs against its major rivals, as short-term two-year US Treasury bond yields tumbled. This helped Gold price stage a comeback from multi-week troughs.
The USD retracement was partly sponsored by the USD/JPY slide, fuelled by hawkish comments from Bank of Japan (BoJ) Deputy Governor Ryozo Himino, who said on Thursday that “if the outlook for economic activity and prices presented in the July report is achieved, the BoJ will accordingly raise interest rates.”
Late Thursday, slightly hawkish commentary from Atlanta Fed President Raphael Bostic was unable to lift the sentiment around the Greenback, leaving the buck on the back foot ahead of Friday’s US PPI inflation data.
Bostic said in a Wall Street Journal (WSJ) interview that he would be “totally comfortable” skipping an interest-rate cut at an upcoming meeting of the US central bank. He added that the “choppiness” in recent data on inflation and employment may warrant leaving rates on hold in November.
The dovish sentiment around the Fed rate cut expectations could be tested on the US PPI report, significantly impacting the value of the US Dollar and Gold price. The US PPI is seen easing to 1.6% YoY in September while the annual core PPI inflation is set to rise to 2.7% in the same period, against a 2.4% growth reported previously.
Gold price could continue to draw support from increased optimism about China’s fiscal stimulus package due to be rolled out on Saturday. Meanwhile, speeches from several Fed policymakers will also keep Gold traders entertained.
Gold price technical analysis: daily chart
Buyers refused to give up on Thursday and jumped back into the game even after Gold price closed Wednesday below the key 21-day Simple Moving Average (SMA) support, then at $2,619.
Gold price recaptured the 21-day SMA support-turned-resistance, now at $2,628, on a daily closing basis on Thursday, reviving the uptrend.
The 14-day Relative Strength Index (RSI) looks north above the 50 level, suggesting that there is scope for more upside.
The next bullish targets for Gold price are seen at the $2,650 psychological barrier and the intermittent highs near $2,670.
On the downside, the immeddate support is seen at the three-week lows near the $2,600 threshold. A sustained break below the latter could extend the downside toward the September 20 low of $2,585.
Further declines could challenge the $2,550 demand area, where the 50-day SMA aligns.
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