Sep 30, 2022
VOT Research Desk
Key Insights and Analysis
Before the Fed’s preferred inflation gauge, gold prices were flat. A stronger beat could re-impose hawkish Fed estimates for 2023. This may hurt XAU/USD as it approaches the 20-day SMA above.
Gold prices remained unchanged over the past 24 hours as bullion traders struggled to find direction following strong gains earlier this week. A stronger beat could re-impose hawkish 2023 Fed estimates, which could hurt XAU/USD as it approaches the 20-day SMA above. The Bank of England’s efforts to temporarily inject liquidity into the financial system sparked the latter. In light of rising longer-term government bond yields, this will assist in preventing problems with pension fund insolvency.
To cut a long story short, this sparked rising hopes that other central banks might follow in the footsteps of the BoE. Markets decreased their hawkish expectations for the Federal Reserve in 2023, causing the US dollar to fall as Treasury yields fluctuated. The yellow metal usually looks good when the last two are falling at the same time.
A lack of action since could indicate a lack of conviction. More specifically, traders of the XAU/USD pair are probably anxiously awaiting the US PCE data over the next 24 hours. The preferred inflation gauge of the Fed will be included in this. A stronger surprise could easily resurrect 2023 rate hike wagers, reversing the yellow metal’s recent upward trend.
As a result, traders appear to be cautious ahead of such important data. The PCE Deflator is expected to increase from 4.6% in July to 4.7% in August. Since June, the Citi Economic Surprise Index has been rising, indicating that economists appear to underestimate the nation’s health and vitality. As a result, a surprise upturn may increase bond yields and the value of the US dollar against gold
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Technical Analysis of Gold After closing above the 78.6% Fibonacci extension at 1651 earlier this week, Gold is having trouble moving higher. This indicates that prices are still below the immediate resistance of the 20-day Simple Moving Average. It might bring the downward focus back. If this is not the case, the long-term falling trend line from March would be the next focus. The 123.6% point at 1562.64 is made visible by clearing the 100% level at 1609.
