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- Gold price prints four-day downtrend while extending pullback from 50-DMA.
- Risk-aversion, increasing odds of Fed’s 75 bps rate hikes keeps XAU/USD sellers hopeful.
- Holiday in the US, Japan and Canada could challenge intraday moves.
- US CPI, FOMC Minutes may fail to stop the bears as firmer yields favor DXY bulls.
Gold price (XAU/USD) remains on the back foot around a one-week low, down for the fourth consecutive day to around $1,690 during early Monday morning in Europe. In doing so, the bullion probes the two-week rebound from the yearly low amid a sluggish day due to the off in the US, Japan and Canada.
Even so, hawkish Fed bets and risk-aversion keeps the XAU/USD bears hopeful. That said, the CME’s FedWatch tool signals the 78% chance for the US central bank’s 75 bps rate hike in November.
Upbeat expectations from the US central bank part ways from the market’s recent expectations of a pause in the rate hike trajectory amid an economic slowdown. The reason could be linked to the firmer US jobs report for September, as well as hawkish Fedspeak.
Furthermore, mixed updates surrounding China and geopolitical fears emanating from Moscow and Beijing also exert downside pressure on the XAU/USD prices. China’s downbeat PMIs for September join fears of escalating Sino-American tussles to drown the gold prices, due to Beijing’s status as one of the key commodity users. However, recently improving covid conditions in the dragon nation joins the People’s Bank of China’s (PBOC) pause in the USD/CNY fix increase to challenging the gold buyers. It should be noted that Russian President Vladimir Putin’s dislike for the Crimean bridge explosion also challenges the sentiment and weigh on the quote.
Amid these plays, the Wall Street benchmarks closed in the red while the S&P 500 Futures dropped for the fourth consecutive day while poking the monthly low near 3,630, down 0.40% intraday at the latest. That said, the US 10- Treasury yields rose for eight consecutive weeks in the last before pausing around 3.90%.
Moving on, annual meetings of the International Monetary Fund (IMF) and the World Bank (WB), as well as updates on Russian President Vladimir Putin’s emergency meeting, on Monday, could entertain gold traders. However, major attention will be given to the Federal Open Market Committee (FOMC) Minutes and Thursday’s US Consumer Price Index (CPI). That said, a likely softer print of the US inflation isn’t expected to ward off downside fears for the metal.
Technical analysis
Gold price extends the previous week’s pullback from the 50-DMA towards the 20-DMA support near $1,680. The RSI retreat also adds strength to the XAU/USD downside.
However, the metal’s downside past $1,680 hinges on its sustained break of the $1,655-50 support zone. Following that, the lower line of a four-month-old bearish channel, around the $1,600 threshold will be in focus.
Alternatively, a clear upside break of the 50-DMA hurdle, around $1,720 by the press time, needs to cross the stated channel’s top-line, close to $1,735 at the latest, to recall the gold buyers.
Overall, the metal prices are likely to remain bearish unless providing a daily closing beyond $1,735.
Gold: Daily chart
Trend: Bearish