Gold price was struggling to hold above $1,717 an ounce on Thursday afternoon following a dip from intraday highs above $1,728 to lows of $1,711 an ounce, this as a soaring US dollar and US Treasury yields combined to suppress sentiment for the precious metal.
With Thursday’s news that the European Central Bank (ECB) had hiked interest rates by 75 basis points, and US Federal Reserve Chair Jerome Powell’s comments that the central bank would go for a 0.75% rate hike in September, saw the bullion shed gains.
Gold price outlook today
Spot gold was poised at $1,717.40 an ounce at 12:34 pm ET, just over 0.6% down on the day and at levels we highlighted here as being critical given the double top pattern formation. Notably, gold prices fell more than 3% in August to point to the broader malaise in the market.
While XAU/USD is likely to struggle over coming days, a retest of the $1,750 – 1,760 zone will follow the consolidation around current prices. The momentum could turn positive as the market anticipates the FOMC meeting later this September, allowing a bullish push into the year end.
According to Alan Jensen from reDollar.com, “gold price will very likely be above $2,000 by 2023.”
For now, Gold is down more than 6% year-to-date and has a 52-week range of $1,680-$2,070.
As noted, traders will likely continue to keep an eye on the Fed, ECB, Bank of England and other leading central banks for policy decisions. Given other market conditions, investors might have to tamper expectations, like if major economies flounder in coming months and tougher approaches linger – something that could hurt gold’s upside prospects due to its high sensitivity to rising interest rates.
Clearly, an aggressive central bank approach amid the fight against inflation – and the dollar index’s best run against peers in years – currently removes some of the appeal safe-haven assets that are non-interest bearing offer to investors.
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