The price of gold maintained an advance as investors weighed on expectations for the path of the Federal Reserve's monetary policy tightening after new data indicated some weakness in the US economy. Yesterday, bullion prices cut six consecutive days of declines with the decline of the dollar. The price of gold XAU/USD moved towards the level of 1754 dollars an ounce, after prices plunged towards the support level of 1728 dollars an ounce at the beginning of the week's trading.
The rebound came as investors await the annual meeting of global central bankers in Jackson Hole later this week and Federal Reserve Chairman Jerome Powell's speech on Friday. Commenting on this, Goldman Sachs chief economist Jan Hatzius said he expected Powell to make the case for a slower rate hike. However, Minneapolis Fed President Neil Kashkari said it was "very clear" that the US central bank should tighten monetary policy again to control inflation.
Investors are assessing the strength of the Fed to continue raising interest rates in the face of increased risks to growth. Economic activity has weakened from the United States to Europe and Asia, fueling fears that price hikes and the war in Ukraine will push the world into recession. While bullion has stabilized ahead of the Jackson Hole seminar, Avtar Sandow, Senior Director of Commodities at Philip Nova, said, “The US dollar index remains at multi-year highs affecting its weight not only on gold prices but also on other currencies.”
Stock Futures are Lower
Today, Asian stock index and US stock futures are lower as investors assess the potential pace of further Fed monetary tightening and growing signs of an economic slowdown. The region-wide stock market was down about 0.5%, led by declines in China and Hong Kong, as shares of Logan Group Co. A volatile stock price once again highlights the real estate crisis affecting the Chinese economy.
The recession was fueled by broader risk aversion which saw declines in the S&P 500, Nasdaq 100 and European futures contracts. Risk-sensitive currencies such as those in Australia and New Zealand declined. The 10-year Treasury yield remained above 3%. The latest data has shown weak economic activity from the US to Europe and Asia, underscoring the delicate task the Fed faces in raising interest rates to bring down high inflation without triggering a recession. In general, investors will flock to Federal Reserve Chairman Jerome Powell's speech at Jackson Hole on Friday to see how tough the US central bank is in the face of mounting economic challenges. The global recovery in stocks from the June low was halted before the much-anticipated event.
Today's XAU/USD Gold Price Forecast:
- Despite the recent rebound, the XAU/USD gold price is still within the bearish trend.
- A strong reversal of the trend will not occur without the gold price moving towards the $1800 psychological resistance again.
- According to the performance on the daily chart below, I see that the price of gold may enter into buying levels from the support levels of 1725 and 1700 dollars, respectively.
- The price of gold may remain under pressure until the reaction, which will be mentioned in the Jackson Hole symposium, which is organized by the US Central Bank.
The price of gold today will be affected by the level of the US dollar and the extent to which investors take risks or not, as well as the reaction from the announcement of US durable goods orders and pending US home sales.
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