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Gold Price Regains Positive Traction Amid A Modest USD Pullback From One-Week High

By Kurt Osterberg · On September 18, 2024

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Gold price attracts fresh buyers on Wednesday amid a modest USD pullback from a one-week peak.

Concerns about an economic slowdown, along with geopolitical risks, lend support to the commodity.

A further recovery in the US bond yields could underpin the USD and cap the non-yielding metal.

Gold price (XAU/USD) attracts some dip-buying during the Asian session on Thursday and for now, seems to have stalled its retracement slide from the $2,600 mark, or a fresh all-time peak touched the previous day. The US dollar (USD) trims a part of its intraday gains to a one-week high, which turns out to be a key factor lending support to the commodity. Furthermore, concerns about an economic slowdown in the United States (US) and China – the world’s two largest economies – and geopolitical risks stemming from the ongoing conflicts in the Middle East benefit the safe-haven precious metal.Meanwhile, receding hopes for a more aggressive policy easing by the Federal Reserve (Fed) continue to push the US Treasury bond yields higher. This could act as a tailwind for the Greenback and keep a lid on any meaningful appreciating move for the non-yielding Gold price. This makes it prudent to wait for some follow-through buying before positioning for the resumption of the prior well-established uptrend. Traders now look to the US economic docket – featuring the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales – for a fresh impetus.

Daily Digest Market Movers: Gold price attracts haven flows amid geopolitical risks, rising US bond yields to cap gains

Gold prices faded from the post-FOMC spike to a fresh record high and dived to a multi-day low on Wednesday amid a goodish US Dollar recovery from its lowest level since July 2023.

The Federal Reserve lowered its benchmark interest rate by 50 basis points to the 4.75%-5% range and forecast rates falling by another half of a percentage point by the end of this year.

In the so-called dot plot, Fed members projected rates falling to 3.4% in 2025, down from a prior forecast of 4.1%, and declining to 2.9% in 2026, down from a prior forecast of 3.1%.

The new economic projections revealed that the Fed doesn’t see inflation returning to the 2% target before 2026, raising questions about the magnitude of interest rate cuts going forward.

Meanwhile, Fed Chair Jerome Powell, during the post-meeting press conference, downplayed concerns about a recession amid cooling inflationary pressures and a very solid labor market.

This, in turn, triggered a sharp rise in the US Treasury bond yields, which extends through the Asian session on Thursday and assists the Greenback to build on its recovery momentum.

Iran-backed Hezbollah said it attacked Israeli artillery positions with rockets on Wednesday in retaliation to blasts in Lebanon, which killed 20 people and injured more than 450.

Israel’s Defence Minister Yoav Gallant declared the start of a new phase in the war, raising the risk of a wider Middle East conflict, which could benefit the safe-haven XAU/USD.

Technical Outlook: Gold price bulls have the upper hand while above $2,532-2,530 resistance breakpoint
From a technical perspective, any subsequent slide is more likely to find decent support near the previous cycle high, around the $2,532-2,530 area. Some follow-through selling will expose the next relevant support near the $2,517-2,515 area, below which the Gold price could accelerate the corrective decline to the $2,500 psychological mark. The downward trajectory could extend further towards the $2,470 confluence – comprising the 50-day Simple Moving Average (SMA) and the lower boundary of a short-term ascending channel. The latter should act as a key pivotal point, which if broken decisively might shift the near-term bias in favor of bearish traders. On the flip side, the $2,577-2,578 region now seems to act as an immediate hurdle ahead of the $2,600 mark, or the all-time peak touched on Wednesday. The subsequent move up could allow the Gold price to challenge the trend-channel resistance, currently pegged near the $2,610-2,612 region. A convincing breakout through the said barrier will be seen as a fresh trigger and set the stage for an extension of the recent well-established uptrend witnessed over the past three months or so.

US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen. More By This Author:GBP/JPY Struggles To Capitalize On Post-UK CPI Rise, Down A Little Above 187.00 AUD/USD Climbs Further Beyond Mid-0.6700s, Nearly Two-Week High Ahead Of US Retail Sales US Dollar Extends Losses As Fed Decision Looms