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  • Gold price came under heavy bearish pressure in the second half of the week and dropped to a one-month low at $1,745 on Thursday.
  • Although the US Dollar Index (DXY) continues to decline, the risky environment prevented gold from continuing its upward trend.
  • The Federal Reserve will release a monetary policy decision and an updated forecast summary after its two-day meeting on Wednesday.

According to market analyst Saqib Iqbal, the weekly forecast for gold price remains bearish as the US dollar remains strong after strong retail sales figures push the dollar higher.

Which developments have affected gold in the past week?

The week had a relatively quiet start and on Monday we saw the continuation of the horizontal channel from the previous week. Despite rising above $1,800 on Tuesday, the precious metal came under heavy bearish pressure in the second half of the week and dropped to a one-month low at $1,745 on Thursday. The XAU/USD pair struggled to make a convincing recovery ahead of the weekend and closed down nearly 2% for the second week in a row.

As expected, US consumer price index (CPI) inflation fell to 5.3% year-on-year in August from 5.4% in July, data released by the US Bureau of Labor Statistics showed on Tuesday. Excluding variable food and energy prices, the core CPI fell from 4.3% to 4%, beating analisdollarserin estimates of 4.2%, according to the report. In the face of this pressure, the dollar started to weaken against all its peers, which indicates that the Fed cannot delay asset purchases, according to the analyst. Thus, although the US Dollar Index (DXY) continued to decline, the risky environment prevented gold from continuing its upward trend.

What is important for the gold price this week? Here is the calendar…

The gold price will fluctuate between key technical levels on Monday and Tuesday as no significant data will be released. The Federal Reserve will release a monetary policy decision and an updated forecast summary after its two-day meeting on Wednesday. Policy makers’ interest rate and inflation forecasts will be followed closely by investors. Additionally, comments made by FOMC Chairman Jerome Powell at the press conference will be analyzed for additional guidance.

At the Jackson Hole Symposium, Powell acknowledged that he thought it would be wise to start mining assets in the July session this year. Investors have overestimated the Fed’s shrinking expectations after several depressing reports since August, including the nonfarm payroll report that rose 235,000 instead of the expected 750,000. However, it seems unlikely that Powell will take a cautious stance based on this week’s reports, according to the analyst.

Attention: There are 2 critical events for the gold market this week!

The highlight of the week is the FOMC rate decision followed by Wednesday’s press conference. Investors will likely look for clues of rate hikes and contractions at the press conference. The next important event is the Market Flash PMI data on Thursday.

Analyst: Gold price may see these levels within the week!

Gold price dropped sharply towards monthly lows, around the $1,750 region, on Thursday. According to Saqib Iqbal, the price is well below the key SMAs. However, according to Saqib Iqbal, SMAs are flat as the metal tried to reduce some losses but failed to do so.

While $1,800 is the currency limit for bulls, on the downside, gold price may find support around $1,723, the August 11 low. However, according to Saqib Iqbal, the price is currently holding a strong horizontal support level that could trigger a slight pullback towards $1,800.


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Michael Lewis

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