Gold Price forecast: XAUUSD drop below $1670 on a strong US dollar and risk-off impulse

Gold Price forecast Xauusd facing a downward trend price drop below $1,670 as US Dollar pushes back yellow metal.

The price of gold falls below $1700 as losses continue below the 20-day EMA.

The yellow metal remains on guard due to the general strength of the US dollar.

Fed official Evans has high hopes for a “gentle landing” and predicts that the Federal funds rate (FFR) would peak at about 4.50% in 2023.

After failing to retain $1700, the gold price is expected to continue to decline, reaching $1650.

A risk-off impulse that is reflected by US equities trading in the red and the rapid increase in the dollar during the Columbus Day vacation, which keeps the US bond market closed, causes the price of gold to fall below the 20-day EMA.

At the time of writing, the XAU/USD is trading at $1668.60, down more than 1.50% from its opening price.

The US Dollar Index (DXY), up 0.35% at 113.142, demonstrates the risk-off urge to keep the dollar in control.

The dollar has increased by 2.75 per cent since October 5, when the DXY fell to 110.05, although it is still behind the YTD high of 114.778.

With oil down by 0.28% and precious metals still expensive, the majority of commodity prices, measured in US dollars, are under pressure.

In the previous week, Fed officials reaffirmed their dedication to achieving the Fed’s 2% inflation target.

Charles Evans, president of the Chicago Fed, stated on Monday that he anticipates the Federal funds rate (FFR) will end at roughly 4.5% at the beginning of 2023 and then stay at that level for “some time.”

Due to Fed predictions that the unemployment rate will reach 4.4% by the end of the year and that the Fed’s inflation measure will decrease from 6.2% in August to 2.8%, he sounded optimistic that the Fed might achieve a soft landing.

Related: Xauusd bounce back, increase above $1,700

Evan’s argument for the Fed to keep tightening monetary policy at a high level is further supported by the US Nonfarm Payrolls report from last week, which beat expectations.

The CME FedWatch Tool estimates that there is an 80% possibility that the Fed will raise rates by 75 basis points at its meeting in November.

Other speakers on the US economic agenda will include Vice-Chair Lael Brainard and other Fed officials.

The Producer Price Index (PPI) for September and the FOMC minutes will also be included on the docket on Wednesday.

The following day, traders’ attention will turn to US inflation data, particularly the CPI and unemployment claims.

Both the University of Michigan Consumer Sentiment and US Retail Sales are anticipated to bring the week to a close.

Gold Price Forecast:

After failing to breach the 50-day EMA on October 4 and 5, gold is currently slipping beneath the 20-day EMA.

The price of the yellow metal has since dropped precipitously, quickening its wild decline, to test the $1650 mark once more.

If it is cleared, it might open the road to the YTD low of $1614.92 and then $1600.

It’s important to keep in mind that the RSI still has some room to move downward before oversold circumstances are reached.

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