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Gold Remains Down on Fed Rate-Hike Concerns

As the market’s risk aversion returned to the scene, the price of Gold (XAU/USD) slumped back toward $1,700, retreating from the intraday high near $1,740 heading into Tuesday’s European session. A temporary halt could be provided before the Jackson Hole Symposium by US data and risk catalysts.

The price of gold was unable to hold $1,744, which represents the 50% Fibonacci Retracement (Fibo) of the recovery from the yearly low of $1,681 to the high of $1,808 on August 10.

Below the latter, a sharp decline ensued as bears briefly attacked the golden ratio at $1,729, the 61.8% Fibo of the same ascent. The 14-day Relative Strength Index (RSI) has shifted and now anticipates a stronger recovery in the path of the midline.

Bulls must consistently close above the 50% Fibo level in order for the recovery to gain traction. They must also turn their attention to the psychological $1,750 level.

However, it’s important to keep in mind that the RSI is still in the negative zone and that the 50-Daily Moving Average (DMA) is moving in the direction of the 21 DMA from above, signaling caution for bulls.

As a result, the rebound seems to be fleeting and bears may continue to exert pressure in the near future. If the 61.8% Fibo support is broken consistently, the downside will move toward $1,700, below which the $1,681 annual lows will be tested.

Sister Metals Slipped 

The price of silver, the sister commodity to gold, dropped to less than $ 19 an ounce, recording a weekly loss of about 9% and pushing silver closer to a bear market in the same way that the XAU/USD gold market experienced a weekly decline.

Copper futures in other metals markets increased to $3.6675 per pound. Futures for platinum dropped to $889.00 per ounce. Futures on an ounce of palladium decreased to $2,127.50. 

What Happened Last Week?

Gold broke a four-week winning streak by closing each day of the week in the red. Throughout the week, XAU/USD suffered from rising US Treasury bond yields brought on by hawkish Fed remarks and escalating concerns about a global recession.

Sellers aim to maintain control as attention shifts to important US data releases and central bankers’ attendance at the Jackson Hole Symposium this week. 

Fundamental Overview

Amidst a protracted rally in the US dollar across the board, XAU/USD had a bad start to the week as it dropped for the sixth day in a row and hit new three-week lows.

As risk-off flows predominated and the benchmark 10-year US Treasury yields reclaimed the crucial 3% level, the US dollar index increased recently to a 19-year high.

On anxiety over Fed rate hikes and rising oil prices, Wall Street also suffered significant losses. The dollar’s upward movement gained additional legs as a result of the EUR/USD decline below parity, which had a disastrous impact on the gold markets. 

Gold Price Forecast

XAU/USD is still within a bearish correction range. It is breaking through the $1,740 per ounce support level, which will cause the technical indicators to move into oversold territory and make it possible for those below it to consider purchasing gold.

Despite the tendency of international central banks to tighten monetary policy even further, led by the US, the gold market is being stimulated by rising geopolitical tensions on a global scale.

Analysts recommend buying gold at all levels of bearishness. On the other hand, the gold price must be moved back towards the psychological resistance level of 1800 dollars an ounce before the bulls can take back control of the trend.

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  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.