XAUUSD: Upside with USA on the Decline?

29 set 2023

The price of gold (XAU/USD) struggled to find direction during the Asian session, remaining above the recent low around $1,858-1,857. The US dollar (USD) retreated from ten-month highs, alleviating pressure on gold. Concerns emerged about a possible US government shutdown on October 1 and issues in the Chinese real estate market, supporting gold as a safe-haven asset. However, a significant recovery in the price of gold seemed uncertain due to the Federal Reserve's likely adherence to a restrictive stance, anticipating at least one more interest rate hike by the end of the year. Traders awaited the US Core Personal Consumption Expenditures Price Index (Core PCE), a key inflation indicator influencing the direction of gold. The US dollar remained weak for the second consecutive day, influenced by a stalemate on Republican demands for significant cuts in public spending and political dynamics. Investor sentiment was weighed down by concerns about the Chinese economic slowdown and real estate market instability. The 2.1% growth of the US economy in the second quarter confirmed expectations of another rate hike by the Fed in the coming months. Technical indicators suggested caution for bearish traders, urging prudence in anticipating further losses. The potential for gold's rise remained limited, with probable resistance around $1,880, while a downside breach of $1,857 could accelerate the trend towards $1,820. Attention remained focused on the US Core PCE Price Index to understand the future path of Fed rate hikes. This is why gold could resume its upward push. Let me know what you think. Happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.