Gold Prices Slip Further Amid a Resilient USD and Hawkish Federal Reserve Outlook

Gold prices extend their downward trajectory observed over recent days, slipping further beneath the $1,915 benchmark and marking a new low for the week.

Arslan Butt•Tuesday, September 26, 2023•2 min read

GOLD prices extend their downward trajectory observed over recent days, slipping further beneath the $1,915 benchmark and marking a new low for the week. Bolstered by its strongest position since December 2022, the US Dollar (USD) continues to exert pressure on the XAU/USD.

The Federal Reserve’s hawkish stance reinforces expectations of further decline for the non-interest-bearing precious metal. Recent communications from the Fed highlighted concerns over persistent US inflation, hinting at potential additional interest rate increases this year. Interestingly, the current consensus among Fed policymakers anticipates only two rate reductions in 2024, in contrast to four originally projected.

However, the prevailing risk-averse sentiment, underscored by global equity market fluctuations, offers some buoyancy to gold as a safe-haven asset. A growing consensus around the Federal Reserve’s intention to sustain higher rates amplifies concerns about economic challenges brought about by soaring borrowing expenses.

Coupled with ongoing apprehensions regarding a potential housing market crisis in China, this has curbed investor enthusiasm for high-risk assets, providing some respite for the XAU/USD. Still, meaningful recuperation for gold remains uncertain, especially given the broader sentiment supporting the Fed’s inclination towards prolonged elevated interest rates.

Recent robust US economic indicators, paired with assertive remarks from key Fed figures, hint at the US central bank’s unwavering commitment to monetary policy tightening. Specifically, Minneapolis Fed President Neel Kashkari posited that US interest rates might need to rise marginally and be maintained at that level to stabilize the economy. This sentiment has spurred a continued decline in the US fixed-income market, propelling the yield of the two-year US government bond to its highest in 17 years. Furthermore, the pivotal 10-year US Treasury note surpassed the 4.50% mark, a feat not seen since 2006, bolstering the USD and reinforcing the bearish outlook for gold.

Gold Technical Analysis:

Monday witnessed gold prices rebuffed around the critical 200-day Simple Moving Average (SMA), and the ensuing downward momentum leans in favour of bearish market participants. Daily chart indicators are now shifting towards a negative trajectory, implying that the most probable direction for the XAU/USD remains bearish. This suggests a potential move towards revisiting the monthly low near the $1,900 milestone. Any subsequent decline might act as a catalyst for bearish traders, setting the stage for further short-term devaluation.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

BlackRock: China might dump U.S. Treasuries for Bitcoin, Gold

31 minutes ago

Gold Price Weekly Forecast: Will XAU/USD Break $3,370 as US Jobs, GDP Loom?

23 hours ago

Forex Signals April 25: Will Trade Talks & Earnings Offer a Bullish Finish for DJIA?

2 days ago

Comments

0 0 votes

Article Rating

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments

Gold Prices Slip Further Amid a Resilient USD and Hawkish Federal Reserve Outlook

Gold prices extend their downward trajectory observed over recent days, slipping further beneath the $1,915 benchmark and marking a new low for the week.

Gold Technical Analysis:

Related Articles

Comments

Sidebar rates

HFM

Doo Prime

XM

Best Forex Brokers

Gold Prices Slip Further Amid a Resilient USD and Hawkish Federal Reserve Outlook

Gold prices extend their downward trajectory observed over recent days, slipping further beneath the $1,915 benchmark and marking a new low for the week.

Gold Technical Analysis:

Related Articles

Comments

Sidebar rates

HFM

Related Posts

Doo Prime

XM

Best Forex Brokers