Gold price edges lower on the US Dollar recovery, Fed rate cut bets might cap its downside
Gold price loses ground in Wednesday’s Asian session.
The deteriorating situation in the Middle East and the Fed’s dovish stance underpin the Gold price.
Traders await the speeches from the Fed’s Waller and Bostic on Wednesday.
The Gold price (XAU/USD) loses momentum amid the modest rebound of the US Dollar on Wednesday. However, the escalating geopolitical tensions in the Middle East might help limit its losses. Additionally, US Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium last week, signalling “time has come” to begin lowering interest rates, might support the precious metal as it reduces the opportunity cost of holding non-interest-paying assets.
“The prospect of falling interest rates is also attracting investors. According to Bloomberg, Gold ETF holdings rose by 15 tonnes last week to the highest level in six months. Speculative interest is particularly strong. The net long position of speculative investors rose to around 193,000 contracts in the week to August 20th, at the same time as Gold hit an all-time high, its highest level in almost four and a half years,” noted Commerzbank’s commodity strategist Carsten Fritsch. Gold price technical analysis: daily chart
The Gold price edges lower on the day. The precious metal remains capped under a five-month-old ascending channel upper boundary and the record high. A broader positive outlook of yellow metal remains unchanged as it holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 64.70, affirming continued bullish pressure in the near term.
The key resistance level for XAU/USD emerges at $2,530, representing the confluence of the all-time high and the upper boundary of the trend channel. A bullish breakout above this level could make a play for the $2,600 psychological barrier.
On the downside, the initial support level is seen at the $2,500 round figure. A breach of the mentioned level could lead to further losses near $2,470, the low of August 22. The next contention level to watch is $2,432, the low of August 15.
Gold price edges lower on the US Dollar recovery, Fed rate cut bets might cap its downside
The Gold price (XAU/USD) loses momentum amid the modest rebound of the US Dollar on Wednesday. However, the escalating geopolitical tensions in the Middle East might help limit its losses. Additionally, US Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium last week, signalling “time has come” to begin lowering interest rates, might support the precious metal as it reduces the opportunity cost of holding non-interest-paying assets.
Daily Digest Market Movers: Gold price loses traction, potential downside seems limited.
“The prospect of falling interest rates is also attracting investors. According to Bloomberg, Gold ETF holdings rose by 15 tonnes last week to the highest level in six months. Speculative interest is particularly strong. The net long position of speculative investors rose to around 193,000 contracts in the week to August 20th, at the same time as Gold hit an all-time high, its highest level in almost four and a half years,” noted Commerzbank’s commodity strategist Carsten Fritsch.
Gold price technical analysis: daily chart
The Gold price edges lower on the day. The precious metal remains capped under a five-month-old ascending channel upper boundary and the record high. A broader positive outlook of yellow metal remains unchanged as it holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 64.70, affirming continued bullish pressure in the near term.
The key resistance level for XAU/USD emerges at $2,530, representing the confluence of the all-time high and the upper boundary of the trend channel. A bullish breakout above this level could make a play for the $2,600 psychological barrier.
On the downside, the initial support level is seen at the $2,500 round figure. A breach of the mentioned level could lead to further losses near $2,470, the low of August 22. The next contention level to watch is $2,432, the low of August 15.
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