Gold Prediction: for the price of gold: Looking at the Fed minutes and keeping the XAU/USD below the 21DMA, $1,650 is the next target.

Oct 12, 2022
VOT Research Desk

Market Insights & Analysis

Weekly lows under $1,700 are reached for gold as Yellen fuels USD bulls.

Hawkish Fed statements support risky Fed rate hike bets and support yields.

For more fall, XAU/USD needs a sustained breach below $1,660.

Early on Wednesday, bulls are trying their luck on the gold price in the face of renewed selling in the US dollar and yields. a recent Financial Times (FT) report.GBP bulls were saved by the declaration that the Bank of England (BOE) is indicating to lenders that it is prepared to extend bond purchases. This led to a sharp rebound in GBP/USD, which wiped out gains in the dollar index.

Despite the S&P 500 futures’ uptick of approximately 0.50 percent thus far, the market’s mixed sentiment continues to weigh on the US Treasury yields. After briefly surpassing the crucial 4.0% level a day ago, the benchmark US 10-year rates continue to consolidate. Despite the most recent retracement, dollar bulls are still supported by concerns about aggressive Fed rate hikes,  

China’s covid resurgence, the UK central bank’s policy, and looming geopolitical tensions. In addition, investors remain cautious ahead of the release of data on the US Producer Price Index (PPI) later in the NA session on Wednesday. Although the minutes of the FOMC’s September meeting may provide some hints about the same, it is unlikely that a slight easing in US factory-gate prices will prevent the Fed from going strong on rate hikes.

On Tuesday, the bright metal had good two-way business, but it finished the day in the red, extending its losing streak to five days and hitting weekly lows. Despite the fact that resurgent demand for the dollar continued to favor gold sellers, the bullion’s pain was alleviated by a slight pullback in US Treasury yields. After US Secretary of State Janet Yellen stated, “I believe the dollar’s current level reflects appropriate policies,” the dollar bulls experienced a strong rebound.

The remarks made by BOE Governor Andrew Bailey and Cleveland Fed President Loretta Mester also increased the buck. According to Mester, the Federal Reserve must keep raising interest rates.

Analytics

The GBP/USD pair fell below 1.1000 as a result of Bailey’s hints that the central bank would end its market support, supporting the recovery of the dollar.

Technically, the XAU/USD price still has a downside bias as long as it stays below the slightly bearish 21-Daily Moving Average (DMA), which is currently at $1,674.

Bears are likely to keep control, as the 14-day Relative Strength Index (RSI) trades flat below the 50.00 level.

A daily closing below the intermittent support of $1,660, which could expose the psychological level of $1,650, is required by sellers. The next target for sellers will be the $1,642 low on September 29.

Alternately, if the bearish momentum is to be stopped, recapturing the 21DMA on a daily closing basis is crucial. The previous day’s high of $1,684 will be tested further up before the $1,700 threshold is reached.

GOLD (Daily)