Gold Price Forecast: XAU/USD pulls back intraday rally and holds steady below $1,665

  • Gold is struggling to maintain its modest gains despite lower yields on US bonds and the dollar.
  • Expectations for more aggressive Fed rate hikes continue to act as a headwind for the yellow metal.
  • The decline appears supported as investors await this week’s key macroeconomic releases from the US.

The Prayed has gained ground on the first day of a new week and has reached a new daily high around the $1,670 area at the start of the European session. However, the rally has been met with fresh selling at higher levels and XAU/USD has returned below the $1,665 level in the last hour.

A combination of factors puts some downward pressure on the US dollar, which in turn offers some support to dollar-denominated gold. the news that UK government expected to backtrack on proposal to abolish top income tax rate they provide a good boost to the pound sterling. This, coupled with a further decline in US Treasury yields, continues to weigh on the dollar.

In fact, the benchmark 10-year US Treasury bond moves away from the highs of 12 years reached last Wednesday. Aside from this, concerns about a deeper global economic downturn and geopolitical risks provide a modest haven boost for XAU/USD. Having said that, prospects of more aggressive monetary policy tightening by major central banks, including the Fed, should cap the yellow metal’s performance.

Investors seem convinced that the US central bank will continue to raise interest rates at a faster pace to curb inflation and have been pricing in another 75 basis point hike in November. These expectations have been bolstered by recent hawkish statements from several FOMC officials and the release of US PCE personal consumption expenditure data on Friday. This, in turn, warrants some caution on the part of the bulls.

Traders may also refrain from opening new directional positions, preferring to stay on the sidelines ahead of important US macro data due at the start of a new month. The week begins with the release of the US Manufacturing PMI on Monday. This, along with speeches from FOMC members and US bond yields, will boost demand for the dollar and provide some lift to gold.

However, the focus is on monthly US employment data to be released on Friday. The popularly known NFP report will play a key role in influencing Fed rate hike expectations and dollar price dynamics. This, in turn, should help investors determine the next directional move for gold.

Technical levels to watch

XAU/USD

Overview
last price today 1663.32
daily change today 2.80
Today’s daily variation in % 0.17
Daily opening today 1660.52
Trends
daily SMA20 1679.23
daily SMA50 1724.96
daily SMA100 1765.61
daily SMA200 1824.61
levels
Previous daily high 1675.49
Previous Daily Low 1659.31
Previous Weekly High 1675.49
Previous Weekly Low 1614.85
Previous Monthly High 1735.17
Previous Monthly Low 1614.85
Daily Fibonacci 38.2% 1665.49
Fibonacci 61.8% daily 1669.31
Daily Pivot Point S1 1654.72
Daily Pivot Point S2 1648.93
Daily Pivot Point S3 1638.54
Daily Pivot Point R1 1670.9
Daily Pivot Point R2 1681.29
Daily Pivot Point R3 1687.08

Source: Fx Street

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