Will XAU/USD Succeed in Climbing?

3 de out. de 2023

The price of gold experienced a correction and stabilized above $1,820 after falling to a multi-month low of $1,815 during the Asian trading hours on Tuesday. The benchmark 10-year US Treasury bond yield holds above 4.7% ahead of US data, not allowing XAU/USD to extend its rebound. The Relative Strength Index (RSI) on the daily chart is signaling extremely oversold conditions and was seen as a key factor that prompted some intraday short-covering around the Gold price. However, the lack of further purchases suggests that the recent downtrend might still be far from being over. Consequently, any subsequent upward movement might still be seen as a selling opportunity and remain capped near the $1,830-1,832 resistance zone. Sustained strength beyond this level could trigger a short-covering rally and lift the yellow metal to the $1,850 intermediate hurdle en route to the $1,858-1,860 strong barrier. On the flip side, the daily swing low, around the $1,815 level, could protect the immediate downside ahead of the $1,800 round-figure mark. Further selling could expose the next relevant support near the $1,770-1,760 region. The price of gold (XAU/USD) has been trending lower over the past two weeks or so following the Federal Reserve (Fed) signal that sticky inflation was likely to attract at least one more rate hike in 2023. Moreover, several Fed officials backed the case to keep rates restrictive for longer to bring inflation to the 2% target. Adding to this, the incoming resilient macro data from the United States (US) supports prospects for further policy tightening by the Fed. This, in turn, remains supportive of elevated US Treasury bond yields, which lifts the US Dollar (USD) to its highest level since November 2022 and drives flows away from the non-yielding yellow metal. The downward trajectory prolongs for the seventh successive day on Tuesday and drags the Gold price to its lowest level since March 9 during the Asian session. That said, a mildly softer tone surrounding the US Treasury bond yields holds back the USD bulls from placing fresh bets and assists the precious metal to find some support near the $1,815 level. XAU/USD manages to recover a major part of its intraday losses, but lacks follow-through in the wake of hawkish Fed expectations and the underlying strong bullish sentiment surrounding the USD. This, in turn, suggests that the path of least resistance for the commodity is to the downside. Also, as per the previous analysis, we have a price that has bounced off an H4 demand zone at the 1816 level as predicted. Now, we await an upward movement and a significant structural change at M15 to seek a long entry with a target zone of 1875. Let me know what you think. Happy trading to all from Nicola, the CEO of Forex48 Trading Academy.