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Gold Price Forecast: XAU/USD drops to 1-1/2 week low, below $1,770 before FOMC minutes

  • Gold turns lower for the 3rd straight day and drops to over a one-week low on Wednesday.
  • Hawkish Fed expectations, rising US bond yields underpin the USD and exert some pressure.
  • The risk-off mood does not lend support to the safe-haven XAU/USD before FOMC minutes.

Gold attracts fresh selling close to the $1,782 region on Wednesday and turns lower for the 3rd straight day. The intraday selling bias remains unabated through the first UNITED STATES session and drags the XAU/USD to a one-and-half-week low, round the $1,765-$1,764 area within the last hour.

The US dollar ticks higher, back nearer to the monthly top touched the prior day, which actually is an integral factor denting demand for the dollar-denominated gold. Despite signs of easing US inflation, investors seem convinced that the Fed would adhere to its policy tightening path. Wednesday’s mostly upbeat US Retail Sales data reaffirms market bets and continues to do something as a tailwind for the buck.

Hawkish Fed expectations, meanwhile, trigger a brand new leg up in america Treasury bond yields. This offers additional support to the greenback and additional plays a part in driving flows from the non-yielding yellow metal. Having said that, growing recession fears, combined with the risk-off impulse, could extend some support to the safe-haven gold and help limit any more losses, at the very least for the moment.

Worries in regards to a global economic depression temper investors’ appetite for perceived riskier assets, that is evident from the generally weaker tone round the equity markets. This may restrain bearish traders to put aggressive bets prior to the FOMC meeting minutes, scheduled for release later through the US session. Market players can look for clues concerning the chance for a 75 bps rate hike in September.

The Fed’s policy outlook would play an integral role in influencing the near-term USD price dynamics and offer a brand new directional impetus to gold. From the technical perspective, the recent repeated failures to get acceptance, or build on the momentum beyond the $1,800 mark supports prospects for an additional near-term depreciating move. Hence, any attempted recovery could be regarded as a selling opportunity.

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