- Gold meets fresh sales on Friday and is under pressure from sustained buying around the dollar.
- Expectations of an aggressive Fed rate hike and high US bond yields continue to benefit the dollar.
- Recession fears weigh on investor sentiment and could offer XAU/USD support.
The Prayed It attracts fresh selling near the $1,675-1,676 area on Friday and falls to a fresh daily low during the first half of the European session. XAU/USD is currently just below the $1,665 level and it remains stuck in a known range that it has held since earlier this week.
US dollar hits new 20-year high on the last day of the week and is seen as a key factor putting downward pressure on gold, denominated in dollars. Also, the prospects of a more aggressive tightening of the Fed’s monetary policy contribute to moving monetary flows away from the yellow metalwhich does not offer returns.
Indeed, markets have been pricing in another 75 basis point Fed rate hike in November. Expectations were bolstered by the Fed’s so-called dot plot, which reveals that policymakers expect the benchmark lending rate to rise above 4% by the end of 2022. From there, officials in the Central banks foresee further increases in 2023.
Dovish Fed Outlook Continues to Support High Bond Yields of the US Treasury. The rate-sensitive two-year US government bond yield hit a new 15-year high and the benchmark 10-year Treasury jumped to its highest level since 2011 on Thursday. This, in turn, should continue to act as a tailwind for the dollar.
Meanwhile, the acceleration of interest rate hikes by the main central banks has stoked concerns of a deeper global economic recession. This, along with headwinds stemming from China’s covid-zero policy and the risk of a further escalation of the war in Ukraine, have fueled recession fears. and have weighed on investor sentiment.
This is demonstrated by the current fall in the stock markets, which could support gold as a safe haven, and help limit deeper losses. Even from a technical point of view, recent range-bound price developments point to traders’ indecision, warranting some caution before entering aggressive directional positions.
Market participants are now awaiting the release of preliminary US PMI data, due to be released early in the American session. However, the focus will be on Fed Chairman Jerome Powell’s speech at an event in Washington, which will weigh on the dollar and produce some significant opportunities around gold.
gold technical levels
|last price today||1662.81|
|daily change today||-8.45|
|Today Daily variation in %||-0.51|
|Daily opening today||1671.26|
|Previous daily high||1684.95|
|Previous Daily Low||1655.69|
|Previous Weekly High||1735.17|
|Previous Weekly Low||1654.17|
|Previous Monthly High||1807.93|
|Previous Monthly Low||1709.68|
|Daily Fibonacci 38.2%||1666.87|
|Fibonacci 61.8% daily||1673.77|
|Daily Pivot Point S1||1656.32|
|Daily Pivot Point S2||1641.37|
|Daily Pivot Point S3||1627.06|
|Daily Pivot Point R1||1685.58|
|Daily Pivot Point R2||1699.89|
|Daily Pivot Point R3||1714.84|
Source: Fx Street