Gold Subdued as Key US Data Loom
XAU/USD Analysis
The precious metal edges towards its third straight profitable month and runs the sixth consecutive week of gains, having hit nine-month highs on Tuesday. This is largely to attributed to the USDollar's demise, on market hopes for a less aggressive Fed.
CME's FedWatch Tool prices in a smaller 25 basis point increase next week [1], which would mean further moderation in the pace of the rate-hike cycle. Fed policy makers largely maintained their hawkish stance during the last round of comments prior to the current quite period, but we did not see any meaningful pushback against market expectations for another downshift.
XAU/USD eyes 76.8% Fibonacci of the 2022 high/low drop 1,959-63, which can open the door for bigger rise to the April high and beyond (1,998-2,000).
However, gold has lost its vigor over the past few days and a pullback to 1,900-1,896 would be reasonable. Such move would expose XAU/USD to the key 1854-42 area, but any Fed surprise aside, we struggle to see what could lead to sustained weakness below this region in the near term.
The next leg of the move will likely be determined by the outcome of a series of upcoming economic releases from the US. Most importantly, markets await the PCE inflation update on Friday, which central bank officials will take into account for their next policy decision.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 23 Sep 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html |
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