Gold Price Talking Points
The worth of gold trades to a recent weekly excessive ($1688) even because the Federal Reserve delivers one other 75bp fee hike, and bullion might proceed to defend the September vary because the Relative Strength Index (RSI) seems to be reversing forward of oversold territory.
Gold Price Defends September Range as RSI Holds Above Oversold Zone
The worth of gold bounces again from the month-to-month low ($1654) as US Treasury yields pull again from recent yearly highs, and the valuable steel might stage one other try to check the 50-Day SMA ($1732) because the RSI holds above 30.
As a end result, the value of gold might proceed to retrace the decline from the month-to-month excessive ($1735), however bullion might fall again in direction of the yearly low ($1654) because it appears to be monitoring the unfavourable slope within the shifting common.
Keep in thoughts, the value of gold cleared the May 2020 low ($1670) following the failed makes an attempt to push above the shifting common, and the valuable steel might face headwinds over the rest of the 12 months because the Federal Open Market Committee (FOMC) initiatives a steeper path for US rates of interest.
The upward adjustment within the rate of interest dot-plot suggests the FOMC will retain its present method in combating inflation because the central financial institution insists that “ongoing will increase within the goal vary for the federal funds fee can be applicable,” and the committee might proceed to strike a hawkish ahead steerage for financial coverage as “restoring worth stability will probably require sustaining a restrictive coverage stance for a while.”
In flip, expectations for increased US rates of interest might additional dampen the attraction of gold because the FOMC argues in opposition to “prematurely loosening coverage,” and it stays to be seen if the Fed will ship one other 75bp fee hike on the subsequent rate of interest determination on November 2 as Chairman Jerome Powell and Co. pledge to “maintain at it till we’re assured the job is finished.”
Until then, developments popping out of the US might affect the value of gold as FOMC pursues a restrictive coverage, and bullion might largely mirror an inverse relationship with Treasury yields because the committee exhibits little curiosity in scaling again its hiking-cycle.
With that stated, the value of gold might proceed to defend the September vary because the RSI holds above oversold territory, however bullion might proceed to threaten the month-to-month low ($1654) because it seems to be monitoring the unfavourable slope within the shifting common.
Gold Price Daily Chart
Source: Trading View
- The worth of gold cleared the May 2020 low ($1670) after failing to check the 50-Day SMA ($1732), and bullion might proceed to threaten the yearly low ($1654) because it seems to be monitoring the unfavourable slope within the shifting common.
- Failure to defend the September vary might push the value of gold in direction of $1748 (50% enlargement), with the following space of curiosity coming in round $1601 (38.2% enlargement) to $1618 (50% retracement).
- A break/shut under the $1584 (78.6% retracement) area opens up the April 2020 low ($1568), however the worth of gold might proceed to defend the September vary because the Relative Strength Index (RSI) seems to be reversing forward of oversold territory.
- Need a break/shut above the $1690 (61.8% retracement) to $1695 (61.8% enlargement) area to deliver the $1726 (38.2% retracement) area on the radar, with a transfer above the 50-Day SMA ($1732) elevating the scope for a check of the month-to-month excessive ($1735).
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— Written by David Song, Currency Strategist
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