XAU/USD Levels: Bearish Winds Persist, yet a Turnaround Draws Near in Gold Price Prediction

12 October 2023, Thursday
XAU/USD Levels: Bearish Winds Persist, yet a Turnaround Draws Near in Gold Price Prediction

Gold Prices Experience Modest Recovery, but Face Challenges Ahead


Gold Prices Rise, but Face Setback


Gold prices (XAU/USD) recently saw a small increase after hitting multi-month lows. On Thursday, the price of gold rose to its highest point since September 27, reaching $1,885. However, this upward momentum was quickly stopped by the release of U.S. inflation data, which was higher than expected. In September, the inflation rate increased by 0.4% compared to the previous month and 3.7% compared to the previous year, surpassing estimates by a small amount.


Inflationary Pressures Affect Gold Prices


The high inflation rates have caused U.S. yields to rise, which has led to a stronger U.S. dollar. Traders have also adjusted their expectations for the Federal Reserve’s interest rate hikes, increasing the chances of a rate hike in December. These changes have had a negative impact on gold and silver prices, causing them to decrease.


Hope for Precious Metals


Although the current market conditions are challenging for gold and silver, there is some hope for the future. Recent statements from the Federal Reserve suggest that they may be ending their interest rate hikes soon. This could create a more favorable environment for non-yielding assets like gold and silver.


Short-Term Outlook for Gold and Silver


In the short term, the outlook for gold and silver is not very positive. However, things could change in the coming months, especially for gold. This could lead to a strong increase in the price of gold in the latter part of the year and heading into 2024. If unexpected economic challenges arise, the Federal Reserve may change its approach, which could further boost gold prices.


Technical Analysis of Gold Prices


Gold recently tried to break through a resistance zone around $1,885 but was unsuccessful. This indicates that sellers still have control of the market. Traders should pay attention to how the price of gold develops in the next few days to see if there is sustained weakness. If so, the price could drop to around $1,860. However, if buyers come back and push the price up, there is initial resistance around $1,885 to $1,890. If the price breaks through this resistance, it could reach $1,905 and potentially even higher.