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GOLD (XAUUSD) Forecast
The US Federal Reserve meeting last week was a hot topic, and it lived up to expectations. The Fed changed its approach by updating its projections and reducing the expected rate cuts for 2024 from 100 to 50 basis points. Additionally, the Fed improved its growth estimates and expressed confidence in the job market’s continued stability.
From a technical perspective, on the weekly time frame, the candle closed with a doji candlestick, following some volatile price movements this week. On the daily timeframe, Friday’s rally encountered resistance at the 200-day MA, while the 50-day MA is slightly above it.
It’s possible that Gold will continue to remain within a range of $1913-$1947 (this week’s high) for the foreseeable future. However, if Gold is to move higher, it will face significant challenges around the $1930 mark. If it manages to close with a daily candle above this level, it could potentially reach the weekly high and the psychological level of $1950.
Should Gold experience a downside break, it will find support around $1913 before coming into focus at the $1900 handle.
Here are the economic events for this week that could affect gold prices.
The value of the euro against the US dollar has been steadily declining since mid-July. This trend is largely due to differences in economic performance and monetary policies between the United States and the Euro Area. The US Federal Reserve’s benchmark interest rate currently stands at an impressive 5.25%-5.50%, while the European Central Bank’s deposit facility rate is 4.0%. This gap may widen even further as US borrowing costs are projected to rise, while the ECB has signaled that their tightening campaign is over.
Investors are unsure if the Fed will hike rates again this year, but this could change if US macro data continues to perform well. Upcoming US personal consumption expenditure figures for August should be closely monitored for any indication that the US consumer is spending and that there are price pressures. If this is the case, it could be bullish for the US dollar.
From a technical standpoint, EUR/USD has found support at 1.0610 after a recent retracement. This support level may prevent further losses, but if it is breached, there could be significant downward pressure with a potential descent towards 1.0570 and 1.0500.
However, if buyers unexpectedly gain control of the market and initiate a bullish turnaround, resistance can be found at 1.0760, with potential for a rally towards the 200-day SMA at 1.0830.
The GBPJPY currency pair experienced a downward trend after the Bank of England decided to maintain its rates during their monetary policy meeting on Thursday. This caused the pair to reach a six-week low at 180.81, which is close to the August low of 180.46.
In the previous week, GBPJPY was unable to break through the 50-day moving average on the daily chart despite several attempts by buyers to increase the price. On Thursday, sellers took control, causing the price to drop to the support area of 180.870.
On Friday, the pair attempted to recover from the low of 181.271 after the Bank of Japan decided to keep its rates unchanged and confirmed its dovish stance. However, the annual inflation rate in Japan decreased to 3.2% in August, its lowest in three months, causing the buying pressure to be short-lived around 182.290.
This week, the focus will be on whether the price will continue to increase after almost losing all the gains made on Friday. If buyers are unable to maintain the upward trend, the next support area for sellers to make another attempt will be 180.150.
After the Bank of England decided to maintain rates at 5.25%, the British pound decreased to a six-month low against the US dollar. By the end of the week, GBPUSD closed at 1.22324, just below the resistance level of 1.23004. A slight upward push is expected before it continues to drop towards the next support area, around 1.19215 and 1.18122.
However, if buyers take control, there are a few obstacles to overcome, particularly the 200 Moving Average, which is currently below the resistance level of 1.2286. If it surpasses that level, it could push the price towards the 1.2800 area before it falls again.
Towards the end of the week, the New Zealand Dollar (NZD) showed signs of improvement against the Canadian Dollar (CAD), thanks to a boost in investor sentiment.
Despite being enclosed in a bearish channel pattern, the NZDCAD found support at 0.79463 on Tuesday. This encouraged buyers to step in and push the price even higher, ultimately closing the week at 0.80523.
For this pair to sustain the upward momentum, the price must surpass the 0.80923 level and aim for 0.82582, before reversing course and heading downwards.
On the other hand, if the price breaks below 0.79294 and buyers are unable to push it back up, the 0.76900 area will be the next support level.
Over the past three weeks, the Australian dollar has been experiencing a bull run, and this trend continued last week. On Thursday, the RBA bulletin was released, highlighting the importance of monitoring wage developments and their impact on inflation.
This week, the strength of the AUDCHF uptrend will be tested at 0.58787, representing a significant milestone. If the pair manages to break above this level, it will likely continue to rise towards the next resistance area just above the 200 MA at 0.61714.
However, if the AUDCHF fails to break above 0.58787, we can expect prices to pull back toward the previous support area at 0.56099 and potentially drop further to 0.53209.
For traders, it is crucial to monitor the 0.58787 area as it will determine the direction of the pair’s movement.
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