Gold Prices Forecast: Global Events Shape XAU/USD’s Vulnerable Landscape

Highlights

• Gold rebounds despite Fed’s rate concerns.
• Dollar’s 0.3% dip makes gold attractive.
• China Evergrande, Japan inflation impact gold narrative.

Gold Prices Edge Higher Amid U.S. Dollar and Bond Yield Declines

Gold prices slightly rebounded on Friday from a series of lows, benefiting from a dip in the U.S. dollar and bond yields. This uptick in the precious metal’s price comes despite looming concerns about the Federal Reserve’s interest rate policies, which have led to its potential fourth straight weekly decline.

Robust US Economy Weighs on Gold Demand

Economic indicators have signaled a robust U.S. economy, raising prospects of another interest rate hike this year by the Federal Reserve. However, Friday’s dip in the dollar index by 0.3% and the benchmark 10-year U.S. Treasury yields from their highest levels since October made gold more attractive to international buyers, at least temporarily.

Fed Divided; Powell Speech Awaited

Minutes from the Federal Reserve’s July meeting highlighted a division among policymakers, with the majority still prioritizing combating inflation. Events like the anticipated speech from Fed Chair Jerome Powell and developments in the U.S. labor market remain in focus, impacting global economic sentiments.

Global Issues Eyed by Gold Traders

Globally, the recent bankruptcy filing by China Evergrande in the U.S. and Japan’s consistent inflation rates offer additional contexts to the broader economic narrative. With all these factors in play, the gold market remains vulnerable and could continue to face challenges unless there’s a significant shift in economic indicators.

Technical Analysis

Gold’s current 4-hour price at $1893.69 is slightly above its previous close of $1892.24, indicating marginal bullishness. When compared to the 200-4H moving average of $1939.09, the metal’s price is currently below this average, suggesting a bearish sentiment in the short term.

Moreover, it is also trading below the 50-4H moving average of $1910.52, reaffirming the bearish outlook. The 14-4H RSI reading stands at 39.27, slightly below the neutral 50 mark, suggesting weaker momentum. Lastly, the current price is hovering near the main support area, bounded by $1893.07 and $1885.79.

In summation, based on the provided indicators and levels, the gold market appears to lean bearish in the short term although vulnerable to a near-term short-covering rally.