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Asset Watch

Gold price may test the next resistance level

 

Tuesday, August 29, 2023

XAU/USD Price Chart and analysis

• The yellow metal price benefits from lower bond yields and awaits a key data release
• The gold bulls take the initiative, key levels to monitor

 

The gold price rallied to a multi-week high reaching $1926/oz. This increase occurred as US bonds yields dropped yesterday due to a higher demand of these bonds. The 10-year bonds’ yields fell by nearly 1%. It is important to note that the gold price has a negative correlation with the 10 years bond yields as bullions do not pay interest.

The Fed chair emphasized in Jackson Hole last week that the US interest rates may have to stay high for longer to make sure that the US inflation levels are heading towards their target at 2% rather than 3%. Markets participants realized that the Fed’s policy continues to hinge on economic data thus, they preferred not to price in any rate hike before checking the US NPF and CPI reports of August.

It is worth noting that the NFP’s forecasts indicate a slower pace of jobs creation hinting at decreased job growth and potentially reducing the immediate need for interest rate hikes.

Gold Daily Price Chart

 

Chart source ADSS Platform

 

The gold price continued to rally for the second day this week after clearing the resistance level discussed in the last week article. Therefore, the precious metal prices could be on the way for a test of the following resistance level located at 1933. However, the 50-day simple moving average residing today at 1930 should be considered. A daily close above 1933 may encourage bulls to rally the price towards 1949.

On the other hand, any failure in closing above 1933 signals a weakening bullish momentum and a possible reversal towards 1911. A daily close below that level opens the doors for bears to take the initiative and press towards 1890.


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