Gold Price Prediction: $4,015 Support Tested as Dollar Strength Pressures Bulls
Gold (XAU/USD) dropped for a fourth day in a row on Tuesday, falling to $4,015 as a stronger U.S. dollar and the rapidly fading...
Quick overview
- Gold (XAU/USD) has fallen for four consecutive days, reaching $4,015 due to a stronger U.S. dollar and reduced expectations of a Federal Reserve rate cut in December.
- Fed vice chair Philip Jefferson's comments on slowing down rate cuts have diminished the likelihood of a December cut, impacting gold prices negatively.
- Traders are awaiting key U.S. economic reports, with expectations that gold may continue to decline in the short term despite strong long-term demand driven by central bank purchases and economic instability.
- Technically, gold has broken out of a rising trend channel, and its future movement will depend on whether it can maintain the $4,000 support level.
Gold (XAU/USD) dropped for a fourth day in a row on Tuesday, falling to $4,015 as a stronger U.S. dollar and the rapidly fading expectations of a Federal Reserve cut in December were really taking their toll on investor sentiment. A stronger dollar, driven by the Dollar Index (DXY) holding up after a big jump on Monday, is making gold much pricier for folks who need to buy it in other currencies. All of this comes after last week’s end to the record U.S. government shutdown, which initially got people guessing that they would get some extra monetary easing, but now people don’t think that’s gonna happen.
Fed vice chair Philip Jefferson was out there saying the central bank should “go slow” on further rate cuts, which pretty much wiped out the expectation of a December cut. We were talking about a 100% chance a few months ago; now it’s down to 42%, and gold (which typically does well in lower interest rates and economic uncertainty) has taken a big hit since then.
What’s Next For The Gold Price?
Traders are now waiting for key U.S. economic reports, including this week’s nonfarm payrolls, to get a better handle on the U.S. economy. According to some of the guys at ANZ, though, the gold price is gonna get hit some more, at least in the short term, because the rate cut talk has dried up, but in the long term, demand for gold is still pretty strong, and that’s due to a few things.
- Central banks are buying it up
- People want to reduce their exposure to the dollar
- Massive U.S. debt levels are becoming increasingly difficult to manage.
- And the global situation is getting more unstable by the day
Gold (XAU/USD) Technical Outlook: $4,015 Level Holds the Key
Technically, gold just dropped out of a rising trend channel, a clear sign of a shift in momentum. The 20-period moving average has flipped, and the RSI is a pretty deep 35, suggesting things are looking pretty bearish for gold, but also overdone.
If gold falls below $4,015, the following supports are at $3,962 and $3,898; on the flip side, a bounce above $4,060 might set gold up for a modest rebound towards $4,113 and $4,168.
For now, though, gold’s path will depend on whether buyers can hold the $4,000 area, a big battleground that will tell whether gold starts to find its footing again or just keeps dropping into year-end.
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