Gold Price Forecast: XAU/USD holds steady near weekly high, just above $1,750 level – by hareshmenghani Gold Commodities Recession Fed Bonds
,750 level during the early European session, closer to the weekly high touched on Tuesday, though any meaningful upside still seems elusive.
Growing worries about a global economic downturn and headwinds stemming from fresh COVID-19 lockdowns in China continue to weigh on investors' sentiment. This is evident from a generally weaker tone around the equity markets, which turns out to be a key factor offering some support to the safe-haven gold. That said, the emergence of fresh US dollar buying might hold back traders from placing aggressive bullish bets around the dollar-denominated commodity.
The overnight knee-jerk reaction to the dismal US PMI prints turns out to be short-lived amid firming expectations for a further policy tightening by the. In fact, the markets are still pricing in at least a 50 bps rate hike move at the September FOMC monetary policy meeting. This remains supportive of elevated US Treasury bond yields, which assists the USD to regain positive traction and might further contribute to capping gains for the non-yielding gold.
on Friday, further warranting some caution before positioning for additional gains. Market participants will look for fresh clues about the possibility of a supersized 75 bps Fed rate hike in September. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold.
In the meantime, traders on Wednesday will take cues from the US economic docket - featuring Durable Goods Orders and Pending Home Sales data later during the early North American session. This, along with the US bond yields, will drive the USD demand and provide some impetus to gold.
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