Gold Price Forecast: XAU/USD struggles near 29-month low amid Fed rate hike jitters – by hareshmenghani Gold Commodities Fed Recession XAUUSD
The US dollar catches fresh bids on the last day of the week amid expectations of a hefty rate hike by the Fed and turns out to be a key factor exerting downward pressure on the dollar-denominated gold. In fact, the markets started pricing in the possibility of a full 100 bps rate increase at the upcoming FOMC meeting on September 20-21 following the release of the stronger US CPI earlier this week.
Moreover, market players also expect the US central bank to deliver another supersized 75 bps rate hike in November. This remains supportive of elevated US Treasury bond yields, which offer additional support to the greenback and further contribute to driving flows away from the non-yielding yellow metal. That said, the risk-off impulse helps limit losses for the safe-haven gold, at least for now.
Apart from this, extremely oversold conditions on the 4-hour chart hold back bearish traders from placing fresh bets around gold. Investors might also prefer to move to the sidelines ahead of next week's key central bank event risks.
is to the downside. Hence, any meaningful recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
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