2021-09-28 • Updated
Investors have favored gold at the start of the week due to the worries over China’s Evergrande debt crisis. As we know, the yellow metal tends to rise in times of market instability. However, the growth has stopped fast due to the strong US dollar (gold and the USD have an inverse relation). The greenback gained as traders expect the Federal Reserve to hike rates earlier than initially thought. Indeed, the US central bank has started talking in a more hawkish manner. As a result, the USD is likely to keep rising and gold – falling.
XAU/USD has formed a symmetrical triangle pattern. The lower line of the triangle intersects with the support level of $1730 – the low of August 9. If it breaks below this support line, it will mean that gold escapes the triangle, so the way down to the psychological mark of $1700 will be open. In the opposite scenario, if gold reverses up from the $1730 level, it may jump to $1750 – the recent high.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
The US Dollar has been remarkably sluggish for the past few weeks despite being within a distinct Demand zone…
A comparative examination of the strength of the US-Dollar often gives tangible insight into the direction of Gold (XAUUSD). The chart above indicates the expectation of a bullish price reaction from the demand zone
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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