GOLD Price Analysis – Sep 20, 2023

Daily Price Outlook

During the Asian trading hours on Wednesday, the price of gold (XAU/USD) struggled to maintain its upward momentum and is now hovering around the $1,930 mark. Investors are adopting a cautious stance, opting to remain on the sidelines in anticipation of the Federal Reserve's Interest Rate Decision. These upcoming events carry the potential to introduce significant volatility into the market.

Gold's current value has fallen from its recent two-week high, primarily driven by the rise in US Treasury yields. Meanwhile, the US Dollar Index (DXY) is maintaining its stability at around 105.10, bolstered by these heightened yields. Notably, the yield on the US 10-year Treasury note has reached 4.36%, marking its highest level in 16 years. This surge in yields presents a significant challenge to gold prices.

Fed Expected to Keep Rates Steady, Impact on Gold

As we all know, the Federal Reserve is about to announce its monetary policy decisions after a two-day meeting. It is widely expected that they will keep interest rates steady in the range of 5.25% to 5.5% In fact, the probabilities of the rates staying the same in September are incredibly high at 99%, according to the CME Fedwatch Tool. Interestingly, the possibility of a rate hike in the November and December meetings has decreased, as shown by the same tool.

Looking ahead, gold traders have their eyes set on the awaited Fed interest rate decision coming up on Wednesday at 18:00 GMT. This event has the potential to provide a strong signal for where gold prices might be heading. Furthermore, traders will keep an eye on the Bank of England (BoE), which will reveal its benchmark rates on Thursday, and the Bank of Japan (BoJ) has its monetary policy meeting scheduled for Friday. These central bank actions and decisions can significantly influence the direction of gold prices shortly.

Strong US Dollar Pressuring Gold Prices

The broad-based US dollar is holding steady near six-month highs as the financial markets prepare for the Federal Reserve's interest rate decision today. However, the stronger US dollar is one of the main reasons why the price of gold has been pushed down even further. Investors are watching closely to see what the Federal Reserve decides, as it could have a significant impact on both the dollar and gold.

GOLD(XAU/USD) - Technical Analysis

Gold's value is experiencing a downward trend as it aims to revisit the previously surpassed neckline of the inverted head and shoulders pattern evident on the chart. This movement is further underscored by the stochastic nearing the oversold domain, suggesting a potential positive shift. Such an alignment could drive the anticipated bullish trajectory in the near future, primarily aiming for the $1,945.20 mark. For intraday forecasts, we retain a bullish perspective, bolstered by the price's position above the EMA50.

However, it's crucial to note that a decline below $1,929.00 might disrupt this bullish outlook, reintroducing bearish pressures. The projected trading spectrum for today spans from a support at $1,920.00 to a resistance at $1,950.00