Gold Price Forecast: XAU/USD holds below $4,400 with Oil, yields surging
- XAU/USD keeps trading within recent ranges between $4,350 and $4,440.
- Higher Oil prices and surging global yields are undermining support for precious metals.
- Gold's near-term trend remains moderately bearish, with $4,300 support area still in danger.
Gold (XAU/USD) edges lower on Thursday after failing to find acceptance above $4,400, with Oil prices nearing the key $100 level and global yields rallying ahead of a string of monetary policy decisions from most of the world’s major central banks.
A weak US Dollar, on the other hand, is keeping the precious metal within the last 10 days’ trading range, while analysts at TD Securities see scope for further Gold appreciation, with the “precious metal landscape still broadly supported by the renewed Dollar-debasement theme, elevated central bank buying and renewed ETF accumulation.”
In this context, the TH Securities expert argues that even if the Fed adopts a more hawkish stance, it is likely to “only postpone the timing of the next leg higher rather than catalyze material downside” for gold and the broader precious metals complex.
Technical Analysis: Hovering above key support around $4,300
The technical picture, however, shows XAU/USD consolidating recent losses just under the 200-day simple moving average (SMA) at $4,538.25, leaving the near-term tone capped, with momentum indicators in the daily chart showing a neutral-to-bearish trend. The Relative Strength Index (14) hovers around the 50 midline, and the Moving Average Convergence Divergence (MACD) remains below zero in line with a depressed histogram.
Upside attempts remain capped below Tuesday's and Wednesday's highs near $4,440, ahead of last week's highs around $4,500 and the mentioned 200-day SMA, now at $4,538.
Bearish attempts, on the contrary, are expected to be tested at the intraweek lows in the mid-$4,300s, which, so far, are closing the path towards the area between $4,311 and $4,282, the August 14 and September 2 lows, respectively, which is the neckline of a bearish Head & Shoulders (H&S) pattern.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.