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Gold Price Forecast: XAU/USD bulls stay the course but bears are lurking

  • Gold price is attempting a move higher but faces headwinds, both technically and fundamentally.
  • THE UNITED STATES CPI data on Wednesday could possibly be pivotal for the gold price.

At $1,787.86, the gold price is firm in the beginning of the week, trading 0.7% higher having climbed from the low of $1,771.22 to a higher of$1,790.04. However, the $1,800 psychological level remains elusive before a crucial inflation report due on Wednesday from the united states calendar that could be pivotal for the yellow metal, US dollar and US yields.

Meanwhile, the united states dollar has returned a few of the gains made after last week’s blockbusterNonfarm Payrollsdata which has soothed a few of the fears about an economic slowdown.

Nevertheless, investors remained cautious because the payrolls data put into expectations of a hawkish USFederal Reserve. USrate futures have priced in a 67.5% potential for a 75-basis-point hike at the Fed’s September meeting, up from about 41% before payrolls data on Friday beat market expectations.

However, US 10-year yields remain below the recent highs of 2.869% up to now. There’s daily support in Monday’s lows near 2.7610% as of this juncture that could mean the relief is temporary with the focus now on consumer prices data on Wednesday. The inflationdata will confirm if the Fed’s tightening efforts have already been successful in needs to tame inflation or if continuedFedtightening is necessary and could be considered a critical milestone for forex markets and even the euro.

”While market pricing has shifted more toward another 75bp hike in September, it really is definately not locked in sufficient reason for CPI data set for release midweek, the yellow metal has had the opportunity to carry firm,” analysts at TD Securities noted.

However, ”alternatively,” the analysts warned, ”prop traders specifically still hold a substantial quantity of long positions, and a continuation of strong economic data may be the catalyst had a need to see an unwind. In this sense, we’ve yet to see capitulation in gold, suggesting the pain trade continues to be to the downside, and we expect the recent rally will ultimately fade.”

Gold technical analysis

It really is worth noting the broadening formation in america 10-year yield the following:

The yield has corrected towards the neckline of the W-formation on the daily chart within the low boundary of the broadeningformation.

Subsequently, if the price hold above the flagged levels on the chart above, a break of the trendline resistance you could end up a rally in yields, a weight for gold prices.

However, the weekly chart’s correction is yet to attain a 61.8% golden ratio the following:

With that said, if the bears move around in this week, a detailed below $1,754.35 could possibly be pivotal in opening the prospects of a substantial downside continuation beyond $1,720.

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