Technical Analysis

GOLD Price Analysis – Sep 12, 2023

By LonghornFX Technical Analysis
Sep 12, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold's price (XAU/USD) has been steadily climbing, recently breaking through the $1,923 mark. It's been in the green for two days in a row, though not with tremendous strength. Traders are awaiting the release of the latest US consumer inflation data scheduled for Wednesday. However, the uptick in gold prices was due to the weakening US Dollar, which makes gold more attractive as an alternative investment. Moving on, the upside seems limited ahead of the US CPI on Wednesday and Thursday's ECB policy meeting.

Impact of USD and Economic Data on Gold Prices

Investors are keeping a close eye on the August US Consumer Price Index (CPI) data as it reveals inflation trends. However, the Federal Reserve (Fed) may stick to its current policies because of low inflation and a weak job market, which could make gold less appealing. On the other hand, a strong US dollar can manage higher interest rates and positive economic news. There's a chance the Fed might raise rates by 25 basis points, possibly in November or December, which could limit gold's upward momentum.

Meanwhile, the positive US economic data from last week suggests a strong economy, which means the Federal Reserve (Fed) can maintain higher interest rates for an extended period. This confident stance supports higher US Treasury bond yields and pushed the US Dollar (USD) to a six-month high last week. The positive US economic data indicating a strong economy has led to expectations of the Federal Reserve maintaining higher interest rates, boosting US Treasury bond yields and the US Dollar (USD). However, recent profit-taking and a weaker USD have offered some support to the Gold price, which tends to perform better in a weaker dollar environment.

Gold's Safe-Haven Appeal Amid Economic Worries

Another factor that has been contributing to the rising appeal of gold is the risk-off sentiment in stock markets. The ongoing concerns surrounding China's economic challenges and the increasing costs of borrowing have encouraged many investors to seek the safety of gold. Moving on, traders are taking a cautious approach as they await the release of the US Consumer Price Index (CPI) report and the upcoming European Central Bank (ECB) meeting.

On the flip side, the ECB faces a tough decision of either raising interest rates due to high inflation or holding off due to a weakening Euro Zone economy, and this uncertainity is adding to gold's appeal. Therefore, gold is benefiting from investor caution amid economic uncertainties in both China and Europe.

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

GOLD(XAU/USD) - Technical Analysis

Gold's price, currently hovering around $1,929.00, struggles to maintain a consistent breach of this level, showcasing a bearish pullback that leans on the intraday bullish trend line evident on the chart. Concurrently, the stochastic indicator is hinting at renewed positive momentum, potentially propelling the gold price to resume its upward trajectory and possibly exceed the aforementioned level, aiming for a subsequent primary target at $1,945.20.

In light of these observations, we anticipate a continuation of the bullish trend in the near term. However, it's essential to recognize that a breach below the $1,919.80 level, followed by a decline to $1,913.15, could deter the anticipated upward movement, pivoting the gold price towards a downtrend. For today, we project the gold price to oscillate between a support level of $1,913.00 and a resistance at $1,940.00.



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