The price of gold fell after the largest decline in a month, as investors sought to buy the US dollar, amid increasing signs of an economic slowdown. Accordingly, bullion prices took a downward movement, and the XAU/USD gold price reached the support level of 1772 dollars an ounce before settling around the 1777 dollars an ounce before important data and events affecting the market direction and investor sentiment.
Gold is now being sold after rising for four weeks, as the US currency renewed its rise. The latest US data showed a rapid decline in manufacturing and lower homebuilders' morale, adding to concerns about risks to global growth after the weak numbers from China.
The softness in China prompted the country's central bank to make a surprise interest rate cut, as the Federal Reserve tightens its anti-inflation policy. This enhanced the attractiveness of the US currency while distorting the attractiveness of gold. Global holdings in bullion-backed exchange-traded funds have shrunk over the past nine weeks.
Where is Gold headed next?
Gold's next move could hinge on the minutes of the Federal Reserve's July meeting, which is scheduled for Wednesday. It may provide clues to the scale of the next rate hike. Ahead of its release, economist Nouriel Roubini warned that markets expecting a pivot and a Fed rate cut in 2023 "looks delusional." Gnanasekar Thiagarajan, Director of Commtrendz Risk Management Services, said the hawkish Fed is still capping gold, which explains why it has failed to hold above $1800 an ounce convincingly. The bullion price is expected to trade between $1,760 and $1,795 in the upcoming sessions.
Before the announcement of the content of the Federal Reserve minutes, Dess, the White House economic adviser, says the US economy faces "a lot of uncertainty" in the coming year. That's a global threat, but it must be backed by a strong labor market and new legislation. Dess added that President Joe Biden's bill to be signed on Tuesday would provide tax subsidies for green energy and healthcare purchases that would help stabilize the US economy.
"The balance of power is with David Westin," Diess added in an interview on Bloomberg TV, "and there's clearly a lot of uncertainty on the 6- to 12-month horizon." "We remain very focused on some of the global threats we face including energy markets, and the second-order effects of the war in Ukraine." However, Dess said fears of the country entering a recession due to high inflation were met by positive economic data, including a 3.5% unemployment rate and an industrial production rate for July that beat expectations. “There is no doubt that we are in a transitional phase,” he said. “It is a transition that our economy needs to reach this more stable growth.”
Dess also said that data showing a slowing housing market was the "intended result of the Fed's aggressive efforts" to keep inflation in check. “This is where you might see the tightening happening in the most direct way because of the effect on mortgage rates and that effect on economic activity.”
XAU/USD Gold Price Forecast Today:
- The XAU/USD gold price may continue to move in a narrow range until the announcement of factors stimulating investor sentiment today.
- It is represented by the announcement of British inflation figures and the growth rate of the Eurozone economy, then the announcement of US retail sales numbers and the content of the minutes of the last meeting of the Federal Reserve.
- The psychological resistance of 1800 dollars is still the key to crossing the bulls towards stronger ascending levels because it stimulates more technical purchases after that, the targets will be 1818 and 1835 dollars, respectively.
On the downside, breaking the support level of 1772 dollars will support the move towards the next support 1760 dollars, and from it and from the lowest of it, I prefer to think of buying gold again.
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