Gold Technical Analysis: Heading Towards Buying Levels

• Gold futures continued their longest losing streak since July, as the rise of the US dollar led to the decline of the yellow metal at the beginning of this week's trading.
• The price of XAU/USD fell to the support level of $ 1728 an ounce, the lowest for the price of gold in nearly a month.
• Investors had been expecting more hawkish comments from the Federal Reserve, reducing the prospects for a slowdown in tightening efforts.
• The price of the precious metal is retreating from a weekly loss of 2%, which adds to its performance since the beginning of the year 2022 to date by about -4.5%.

As for the price of silver, the sister commodity to gold, it is also retreating and tumbled to $ 18,835 an ounce. The price of the white metal fell more than 6% last week, exacerbating its horrific performance in 2022 by 19.35%. Since investors priced interest rates at around 3.5% by the end of the year, gold prices have become a victim in this market. Several US Federal Reserve officials dismissed the market's suggestion that the central bank might start cutting interest rates in the face of slowing growth. The aggressive nature of the Federal Reserve has bolstered the US currency. The US Dollar Index (DXY), which measures the value of the US currency against a basket of major currencies, rose to 108.41, and a strong dollar is bad for dollar-priced commodities because it makes it more expensive to buy for foreign investors.

Commenting on the performance, Han Tan, Senior Market Analyst at Exinity said: "Precious metals are fading as the burning US dollar continues its quest to return to recent highs, as markets regain their bets on the Fed and the tightening path."

The US Treasury market was also higher overall, with the benchmark 10-year yield unchanged at 2.989%. One-year yields rose 6.4 basis points to 3.307%, while 30-year yields rose 0.1 basis points to 3.226%. The spread between the two-year and 10-year bond yields is stable at -31 basis points.

Relative to the prices of other metallic commodities, the price of copper fell to $3.6315 per pound. Platinum futures fell to $861.30 an ounce. Futures contracts for palladium fell to $ 2004 an ounce.

All eyes on Federal Reserve

Overall, gold traded at its lowest level in more than three weeks as Federal Reserve officials reiterated their commitment to tighten monetary settings to curb inflation. Bullion prices capped their first weekly decline in five as investors weighed optimistic statements by policy makers that warn of a rise in US interest rates. Richmond Fed President Thomas Barkin said Friday that the US central bank is determined to return inflation to its 2% target, even if that means risking a recession in the US.

All eyes will be on Federal Reserve Governor Jerome Powell when he speaks Friday at the annual meeting of central bankers in Jackson Hole. He is expected to reiterate the Fed's determination to continue raising interest rates to control inflation, though he may stop indicating how senior officials will go when they meet next month.

High interest rates weigh on non-interest bearing bullion. Investor demand has faltered, with holdings in exchange-traded funds falling for the 10th consecutive week, according to preliminary data compiled by Bloomberg. Ravindra Rao, Head of Commodity Research at Kotak Securities Ltd. ETFs, said ETFs showed modest buying interest on Friday "the price of gold may remain under pressure as we see a shift from riskier assets to the safety of the US dollar." He said investors were re-entering.

Today's XAU/USD Gold Price Forecast:

Bears control over the gold price direction is still the strongest, and the recent losses pushed the technical indicators on the daily chart towards oversold levels. Therefore, it is possible to think about buying gold from the following support levels of 1715 dollars and 1685 dollars, respectively. The uptrend for the XAU/USD price will not return without moving towards the top of $1800 an ounce. The price of gold may remain under pressure until the Jackson Hole symposium.

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