XAU/USD, the price of gold quoted in US dollars, has gone quiet. It merely flops around its daily open price and remains trapped within a very narrow intraday range. Ultimately, analysts warn the gold market is in danger of losing even more ground in the short term. At the time of writing, the XAU/USD is trading below a horizontal 20 Simple Moving Average (SMA), suggesting that investors may have turned bearish on the precious metal.
Despite the recent bearish push, XAU/USD is still holding strong above the bullish 100 and 200 SMAs. On the upside, the first resistance is at the 20 simple moving average, now at $3,633. Meanwhile, the XAU/USD daily momentum indicator signals some loss of upside impetus, but it is still in positive territory. This indicates that while there is no short-term upward pressure, the possibility for a longer-term recovery still cannot be discounted.
It looks like the Relative Strength Index (RSI) for XAU/USD is heading down as well, but it’s pointing toward the neutral 50 mark. This means that on balance, there is not a powerful directional force pushing in either direction.
Key gold market indicators
Traders are looking at the following indicators as they make predictions on where the gold market is heading next.
Support for XAU/USD lies at 3,722.54, 3,707.40 and 3,691.90 respectively. On the other hand, resistance levels are seen at 3,758.80, 3,779.15 and 3,791.00. These levels will be key to seeing where gold prices go in the short-term.
The recently released economic data has thrown another wrench into the mix. Initial Jobless Claims for the week ending September 27 rose to 218,000. This number came in a bit under the forecasted 235,000 and is up from last week’s count of 232,000. Understanding why this increase in jobless claims may represent deeper cracks in the economic foundation is essential for predicting future gold prices.
Market participants are looking forward to the release of August’s Personal Consumption Expenditures (PCE) Price Index data. PHMSA’s long-awaited release comes on the eve of this Friday. Economists predict the core annualized reading for the August PCE Price Index to remain flat. In other words, it needs to remain at 2.9%—the same as they were in July. This data provides important context around current inflationary pressures. It shows prevailing patterns in consumer expenditure, which usually have a large impact on gold’s lustre as a safe-haven asset.