The market discussed the possibility of a 50 or 75 basis point rate hike at the US Federal Reserve’s September meeting. According to market analyst Sugandha Sachdeva, gold prices are likely to retest the downside levels between $1,720 and $17.10 before another upward move begins.
A panorama of last week
cryptocoin.comAs you can follow, gold prices continued their weak course last week. On Friday, it closed the week in the $1,736 region with a loss of 1.14%. Besides, it started its opening on Monday with a decline. The precious metal witnessed volatility throughout the week as buying interest came in from lows around $1,730. However, towards the end of the week, he gave up all his earnings. According to the analyst, better-than-expected economic data and the upward momentum in the dollar index (DXY), fueled by the hawkish comments from various Fed officials, was the most important factor putting pressure on gold.
The dollar initially rallied to two-year highs to test the 109.27 mark. However, as the momentum dropped slightly, so did gold. Thus, it witnessed renewed buying interest. Meanwhile, US GDP contracted by 0.6% year-on-year for the second quarter compared to the second forecast. This was an upward revision from the previously predicted 0.9% decline rate. In another important piece of data, according to the US Personal Consumption Expenditure Price Index, the signs of easing in US inflation along with softening energy prices have raised hopes that price pressures in the US may have peaked. US consumer prices rose 6.3% year-on-year in July compared to a 6.8% year-on-year increase in June.
In addition, the markets eagerly awaited new hints of the possibility of more aggressive rate hikes from Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium towards the end of the week. The market is raising the possibility of a 50 or 75 basis point rate hike at the Fed’s September meeting. In the anticipated event, the Fed Chairman made a remarkably hawkish speech. He said the policy stance will remain restrictive for a while to restore price stability. This again led investors to the safety of the dollar. Thus, it reduced the attractiveness of gold.
Gold price view
Market analyst Sugandha Sachdeva provides the following analysis of the technical outlook for gold. As for this week’s outlook, gold prices are trading with a bearish trend. It is vulnerable to some more selling pressure with short-term resistance at $1,770 in the coming days. Prices are likely to retest the downside levels between $1,720 and $1,710 before attempting another upside move.
Key events of the week to follow
Market participants will watch US nonfarm payrolls and unemployment rate data carefully. Because these data will give clues about the health of the US economy. Apart from that, inflation figures from Europe will provide some clues for next month’s ECB policy actions. Manufacturing data from the US, China and Europe will be on investors’ radar later in the week. The dollar took a breather after approaching two-year highs of around 109.29. However, it found strong support at the 108 level. The DXY move is very important as it is likely to re-energize. According to the analyst, as long as DXY stays above the same level, it will continue to be a key headwind for gold prices.
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