Gold Price Forecast: Buyers are all set to kick in at $1,760. Are you ready?
Arslan Butt • 2 min read
On Wednesday, the precious metal, gold, continues to trade sideways, within a narrow trading range between 1,761 and 1755. On Tuesday, gold closed at $1,760.55, after reaching a high of $1,769.90, and a low of $1,750.55. Yesterday, the XAU/USD prices found some support and increased, as rising inflation fears reduced the risk appetite. Moreover, the stronger demand for the safe-haven metal also extended some support. However, the strength of the US dollar kept the gains limited for the day.
The bond yield on the benchmark 10-year note in the United States fell to 1.56% on Tuesday, allowing the yellow metal to gain for the day. Meanwhile, the US Dollar Index, which measures the value of the greenback against a basket of six major currencies, rose to 94.56, limiting any further gains in the yellow metal.
Risk-off Sentiment Underpins Gold Prices Above 1,760
The risk appetite faded away in the markets, due to threats to the economic outlook, due to a global energy crunch and increased fears of inflation. This drove more investors towards safer assets, like gold.
As we know, gold is usually seen as an inflation hedge, but the prospects of reduced central bank stimulus and interest rate hikes tend to push government bond yields up. This translates into higher opportunity costs for holding gold, which is a commodity that pays no interest.
On the data front, at 15:00 GMT, the NFIB Small Business Index for September came it. It remained flat, in line with the expectations of 99.7. Furthermore, at 19:00 GMT, the JOLTS Job Openings for August were released, showing a drop to 10.44M,which was lower than the projection of 10.95M. This weighed on the US dollar and pushed gold higher.
Speech by President Raphael Bostic of Atlanta Fed Bank
On Tuesday, Atlanta Fed Bank President Raphael Bostic said that the US inflation was above the Federal Reserve’s 2% inflation target. Policymakers need to remain careful, to ensure that pandemic-induced pressures do not cause long-term inflation expectations to become unanchored.
He is of the view that pricing trends affected by the pandemic will unwind eventually. However, he is concerned that some of the supply chain disruptions might last longer than initially expected. He said that the staff of the Fed might stop referring to inflationary pressures as transitory, as they are likely to remain above the Federal Reserve’s 2% target.
According to Fed Vice Chair Richard Clarida, the standard of substantial further progress has been more than met, with regard to the price stability mandate. However, the employer mandate has not been completed yet. He said that the Fed should soon start reducing the pace of bond purchases. Clarida also noted that the Fed might end tapering by the end of 2022.
Gold Price Forecast Steady Above $1,760 – Brace for a Buy Trade
- Gold is trading with a neutral bias at the 1,760 level. It holds above an intraday pivot point level of 1,760, providing a bullish bias for the precious metal today
- On the higher side, gold is likely to find immediate resistance at 1,769. At the same time, a break-out at the 1,769 level could lead the precious metal prices towards the next resistance levels of 1,773 and 1,779
- Furthermore, gold may find immediate support on the bearish side at 1,750. This is extended by a double bottom pattern on the 4-hour timeframe.
- Below this pivot point level, the 50-day SMA (simple moving average) provides the next immediate support at 1,760. Let’s consider staying bullish above 1,760, and bearish below the same level today. Good luck!