- Summary:
- Gold price is range-bound with pressure from a strong US dollar subduing potential gains from bearish stocks. Here's what could change that.
Gold price declined further on Wednesday, extending its loss-making streak to the fourth successive session and failing to leverage Tuesday’s stock market downturn. The safe haven metal was down by 0.2 percent, trading at $2,486 at the spot market as of this writing. Furthermore, its losses in the last five days stood at 0.5 percent.
US stock markets declined significantly on Tuesday, with the S&P 500 down by 2.1 percent, the Dow Jones Index at -1.5 percent and the Nasdaq Composite losing 3.2 percent of its value. However, gold prices uncharacteristically declined, with traders ignoring falling US treasury bond yields. At the time of writing, yields on benchmark 10-year bonds were down by 20 basis points to 3.82 percent.
A fall below the psychological $2,500 mark has triggered a bearish sentiment around the yellow metal. However, an impending Fed interest rate cut in mid-September will provide a foundation for recovery.
The highlight of the week is the Non-Farm Payrolls (NFP) data, which will define the depth of the interest rate cuts. According to the CME FedWatch Tool, 61 percent of traders expect the Fed to announce a 25 basis points cut. However, that could deepen if the NFP numbers miss forecast estimates, projecting the figure to be 164k.
Gold price prediction
Gold price momentum indicators favour the upside momentum, as seen on the 2-hour chart. The price is below the 20-EMA, which crossed below the 50-EMA recently, showing bearish control. Meanwhile, the RSI is at 47, affirming the downside view.
The XAUUSD pair has pivoted at 2,491, and the downside will likely continue if resistance persists at that level. That will likely establish the first support at 2,485, but extended control could result in a stronger bearish momentum to break below that mark and test the second support at 2,480.
Alternatively, a move above 2,491 will favour the bulls to take control, potentially setting up the first barrier at 2,497. However, a stronger upward push will overcome that barrier and potentially test 2,501. At that point, the upside narrative will be invalid.
