- Gold prices are down 3% for the week despite investors’ dovish view of the July FOMC minutes.
- U.S. central bank policymakers continue to oppose inflation, even as they acknowledge downside risks to economic growth.
- Gold Price Analysis (XAU/USD): Breaking below $1750 opens the way to 1711-1739 The door to the dollar range.
Gold prices fall for the fifth day in a row and will be down 3 for the week % , triggered by a turnaround in sentiment, while the dollar hit a five-week high against a basket of currencies. At the time of writing, XAU/USD is trading at $1746.34 per troy ounce.
Gold Fed’s aggressive expectations lead to price drop
Wall Street will end the week in the red. A Fed spokesman this week reiterated that U.S. inflation is “too high,” despite acknowledging that the July data was “encouraging.” However, even one of the most dovish Kansas City Fed presidents, Esther George, has mentioned the need for further rate hikes, although the size of the hikes is debatable.
It is worth noting that the XAU/USD price did not rebound despite traders calling the FOMC minutes “dovish”. However, since the last monetary policy meeting, Fed officials have reiterated that lowering inflation is the primary goal, even as Minnesota Fed President Neil Kashkari expressed concerns about economic growth. He commented that he is not sure the Fed can achieve its goal of price stability without tipping the U.S. economy into recession. The U.S. dollar index rose 2.27% this week to 108.078, posing resistance for the dollar-denominated yellow metal asset. Another factor weighing on gold prices was U.S. Treasury yields, led by the benchmark 10-year note rate, which rose 8 basis points to end the week at 2.974%.
Going back to XAU/USD price action, spot prices have plummeted since Wednesday, when the Fed released the FOMC minutes below 20 The daily moving average is $1763.92, exacerbating the $14 drop below the $1750 mark by the end of the year.
Gold traders should pay attention to important economic data next week. The U.S. economic file will include the S&P Global Purchasing Managers’ Index for August, jobless claims for the week ended Aug. 19, the Fed’s favorite inflation gauge, the PCE for July, and Fed Chair Jerome Powell will speak at the Jackson Hole Economic Symposium. Gold Price Analysis (XAU/USD): Technical Outlook Gold prices (XAU/USD) are skewed to the downside. A break below the July 8 high turned support at $1752.46 opened the door to the July 27 low at $1711.58 as sellers prepared to attack the $1700 area. However, XAU/USD sellers will need to break above fundamental levels on the downside, starting with the top of the four-day trading range at $1,739 and then the bottom at $1,711.58. Once both levels are cleared, the card will drop to $1700.
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