Gold Price Hold to Three-Week Low, Pessimists see a Downturn

The Gold Price, denoted as XAU/USD, is currently grappling with a significant challenge. As it lingers near its lowest level since October 19, a point it reached just yesterday. This subdued performance is primarily attributable to the divergent statements issued by several Federal Reserve officials. Those were in relation to the prospective trajectory of interest rate increases. These incongruities have resulted in a redirection of capital away from gold. As it is a non-yielding asset. Commencing from the outset of this week. Furthermore, the waning apprehension regarding a further escalation of the Israel-Hamas conflict is another element contributing to the diminishing demand for this safe-haven commodity.

Gold Price Finds Support Amid Belief in Near End of US Monetary Tightening

Conversely, gold’s downward momentum is being mitigated by the mounting consensus that the US central bank is approaching the culmination of its policy tightening campaign. This sentiment has led to a decline in US Treasury bond yields. Also has left the US Dollar (USD) in a weakened position. Moreover, the pervading cautious sentiment in the financial markets, coupled with ongoing economic challenges faced by China, is conferring some support to the precious metal and serving to restrict its downside potential. Investors are presently eagerly anticipating the release of the US Weekly Initial Jobless Claims data as a potential catalyst ahead of an impending speech by Federal Reserve Chair Jerome Powell.

Gold Price Stays Near October 19 Low Amid Stable Bond Yields and Weak Dollar

Throughout the Asian trading session on Thursday, the value of gold has continued to exhibit a subdued performance. Residing in proximity to its nadir since October 19. This persistent weakness. However, has not been accompanied by a notable extension of selling pressure. A phenomenon partially attributed to a modest downtick in the US Dollar.

The 10-year benchmark US government bond yield has remained at a level close to its lowest point in over a month. This stability in bond yields has exerted a dampening influence on the US Dollar. Thereby mitigating the downward trajectory of gold. It is imperative to recognize that gold, being a non-interest-bearing asset, often experiences enhanced demand when interest rates. As reflected by bond yields, are subdued.

Also Read: Jerome Powell speech in parallel with the dollar’s rise

Fed Officials Diverge on Monetary Policy Direction, Powell’s Speech Awaited

Within the echelons of the Federal Reserve, a diversity of perspectives exists. Some Federal Reserve officials have opted to keep the door ajar for additional policy tightening, even though the CME FedWatch Tool currently assigns an 18% probability to interest rate cuts as early as March.

Federal Reserve Governor Lisa Cook has articulated a view that the existing monetary policy stance is adequately restrictive to preserve price stability. In contrast, Minneapolis Federal Reserve President Neil Kashkari has expressed reservations regarding the sufficiency of this stance, particularly in light of the enduring resilience displayed by the US economy.

Chicago Federal Reserve President Austan Goolsbee has underscored the significance of deliberating upon the appropriate level of interest rates. Concurrently, Federal Reserve Governor Michelle Bowman has engaged in discussions concerning the potential for supplementary interest rate hikes later in the present year. It is worth noting that Federal Reserve Chair Jerome Powell, in a recent address, refrained from providing commentary on monetary policy or the economic outlook. He is scheduled to deliver remarks at another conference on Thursday, potentially offering more insight on these subjects.

China’s Latest Inflation Data Reveals Ongoing Deflationary Pressures

In an unrelated development, the most recent Chinese inflation data, unveiled on Thursday, highlights the continuation of disinflationary pressures amidst a deteriorating economic climate. According to data released by the National Bureau of Statistics, China’s Consumer Price Index (CPI) contracted by 0.1% in October. In contrast to a 0.2% increase observed in the preceding month. This resulted in a 0.2% year-on-year decline.

Moreover, China’s Producer Price Index (PPI) has experienced its thirteenth consecutive monthly contraction, declining by 2.6% in October. This figure registers a slight increase compared to the 2.5% contraction in the prior month. It surpassed market expectations that had anticipated a 2.8% decline.

Gold’s Technical Analysis: Support Break Suggests Bearish Trend

From a technical perspective, the recent break and close below the $1,954-1,953 support zone suggest a bearish outlook. Oscillators on the daily chart are also turning negative. Supporting the possibility of a decline towards the crucial 200-day Simple Moving Average (SMA) around $1,933. Breaking the 100-day SMA at $1,927-1,926 would indicate a potential end to the recent bullish trend.

On the other hand, a meaningful recovery may face strong resistance near $1,970. A sustained move above this level could trigger a short-covering rally towards the next obstacle at $1,980, with the ultimate target in the $1,990-$1,992 range. Further buying momentum could push the Gold price above $2,000. Which aiming to retest the multi-month high at $2,009-2,010 recorded in October.

Do you need help in finding the best crypto exchange for your needs?
Click here: The Best Crypto Exchange Finder