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Gold Forecast: XAU/USD extends losses past $1,750

  • The price of gold slumped 3% for the week, despite investors’ sentiment on the July FOMC minutes.
  • US central bank policy makers continued their campaign against inflation, while acknowledging downside risks to growth.
  • Gold Price Analysis (XAU/USD): The break below $1,750 opened the door to the range of $1,711 to $1,739.

the price of gold falls for a fifth day in a row, to end the week down 3%, triggered by shifting sentiment, as the US dollar hits a five-week high against a basket of currencies. At the time of writing this report, the XAU/USD It is trading at $1,746.34 a troy ounce.

Gold price fell on expectations of Fed aggression
Wall Street will end the week with losses. US Federal Reserve spokesmen reiterated throughout the week that US inflation is “too high,” despite acknowledging that July data was “encouraging.” However, even one of the more dovish, Kansas City Fed President Esther George, mentioned that further rate hikes are necessary, although the magnitude of them is open to discussion.

Notably, XAU./USD prices were unable to rise, despite traders’ perception that the FOMC minutes were “dovish”. However, since the last monetary policy meeting, Fed officials have reiterated that the primary goal is to reduce inflation, despite concerns about growth expressed by Minnesota Fed President Neil Kashkari. He commented that he is not sure that the Fed can achieve the objective of price stability without the US economy entering a recession.

Meanwhile, the US Dollar Index finished the week up 2.27% to 108.078, which is a headwind for the yellow metal’s dollar-denominated asset. Another factor weighing on the gold price was US Treasury yields, led by the benchmark 10-year note rate, which added eight basis points, ending the week at 2,974%.

Going back to the XAU/USD price action, spot prices fell from Wednesday, when the Fed released the FOMC Minutes, below the 20-day EMA at $1,763.92, compounding the 14-day drop. $ below $1,750 at the end of the week.

Gold traders should keep an eye on critical economic data next week. On the US economic docket will be August Global PMIs, Initial Jobless Claims for the week ending August 19, the Fed’s favorite inflation gauge, July PCE, and the Fed economic symposium in Jackson Hole, where Fed Chairman Jerome Powell will speak.

Gold Price Analysis (XAU/USD): Technical Outlook

The price of gold (XAU/USD) has a bearish bias. The break below the July 8 high turned support at $1,752.46 opened the door towards the July 27 lows at $1,711.58 as sellers prepare to attack the $1,700 area. However, XAU/USD sellers need to break essential levels to the downside, starting from the top of a four-day range at $1,739, followed by the bottom at $1,711.58. Once both levels are broken, a drop to $1,700 is anticipated.

Source: Fx Street

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