Technical Analysis

GOLD Price Analysis – Aug 08, 2023

By LonghornFX Technical Analysis
Aug 8, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold price (XAU/USD) failed to stop its long losing streak and slipped to around $1,930.00 as concerns about upcoming Consumer Price Index (CPI) data weighed on its appeal. Furthermore, the precious metal faced pressure due to a strong US Dollar, with investors worried that US inflation could stay high due to ongoing wage growth and rising global oil prices. As a result, this marks the second consecutive day of Gold losing its value. It dropped to a fresh low of around $1,931 during the Asian trading session. Nonetheless, it's important to note that it's still higher than the lowest point it hit three and a half weeks ago.

Factors Affecting Gold Price: US Dollar Strength and Fed's Policy Outlook

The broad-based US Dollar is getting stronger as people believe the Federal Reserve might tighten its rules, causing Gold prices to drop. Many predict a 0.25% interest rate hike by the Fed in either September or November, supported by recent job data. Although the main job number was not satisfactory, higher wages and lower unemployment show a solid job market.

Michele Bowman from the Fed suggests more rate hikes to control inflation, and John Williams hints at possible rate cuts in early 2024, depending on the economy. Looking ahead, the upcoming consumer price data from both China and the US could have an impact on Gold's value. If readings are lower, it might lead to a reduction in expectations for rate hikes, which could affect the price of Gold.

Potential Impact on Gold Price: Inflation Trends, Fed Rates, and Uncertainties

Looking ahead, if inflation decreases as experts expect, and if the economy gets stronger, some investors might start thinking the Fed will raise interest rates this year. This could lead to Gold's price dropping more, even though Gold is usually seen as a way to protect against inflation. But things are a bit mixed up right now, so it's smart to be careful before deciding that Gold will definitely keep getting cheaper.

On the other hand, the recent selling shows that the drop in Gold's price we've been seeing for the last three weeks isn't done yet. This suggests that Gold's price will probably keep going down for a while.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD(XAU/USD) - Technical Analysis

The gold price is displaying a more pronounced bearish inclination as it approaches the minor support level at $1929.00. The impending objective is to breach this level, thereby facilitating the achievement of our primary anticipated target positioned at $1913.15.

Consequently, our outlook maintains a bearish trajectory for the upcoming period, influenced by the previously formed double top pattern, in conjunction with the downward pressure exerted by the EMA50. It is important to note that surpassing $1945.20 would nullify the previously mentioned negative configuration, potentially prompting a price attempt to reestablish a bullish trend.

The projected trading range for today is anticipated to fluctuate between the support at $1915.00 and the resistance at $1945.00.



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