Gold Technical Analysis: Bears’ Control Increases

On the winning side of Wall Street were the high-growth stocks that could be among the biggest beneficiaries if the Federal Reserve does raise US interest rates. 

• The selling pressure on gold increased in light of the continuation of the positive momentum of the US dollar from the announcement of the US inflation reading being stronger than expected.
• Accordingly, the price of gold XAU/USD has moved towards the support level of $1905 per ounce, the lowest it has been in two weeks.
• Gold will stabilize around the level of $1909 per ounce at the beginning of today’s session, Thursday ahead of a new round of important American economic data along with European Central Bank policy decisions.

Yesterday, the performance of the American stock indices varied. These modest moves followed an immediate reaction to the US inflation report in the financial markets, where bond yields and stock prices swung back and forth several times. The official report said that American consumers paid prices last month 3.7% higher than the previous year, an increase from the inflation rate in July of 3.2%.

That’s frustrating for shoppers paying higher prices, but much of the acceleration has been due to rising fuel costs, which can swing sharply and quickly. Accordingly, the economists said that ignoring these matters, the basic inflation trends still point to the continuation of moderation. Inflation has seen a general decline since peaking above 9% last year.

Overall the US inflation report was highly anticipated as it will help guide what the Fed does next on interest rates. The Fed has already raised its key interest rate to its highest level in more than two decades, which has hurt stock prices and other investments, and the hope on Wall Street is that inflation will ease enough to do so.

On the winning side of Wall Street were the high-growth stocks that could be among the biggest beneficiaries if the Federal Reserve does raise US interest rates. Where high-interest rates harm all types of investments, but they often do the most damage to technology companies and other companies that promise great growth in the future. According to trading, Amazon shares rose by 2.6% and were one of the strongest forces that pushed the S&P 500 index higher. Microsoft shares rose by 1.3%, and Nvidia shares rose by 1.4%.

• According to the performance on the daily chart below, the price of gold XAU/USD moves within a recently formed opposite downward channel.
• The bears’ control over the direction will increase in the event that the $1900 support is broken, which may attract the bears to stronger downward levels.
• The closest to it after that is $1885 per ounce, from which at least the best return to buying gold without risk.

There are still other factors supporting the gold market, consisting of global geopolitical tensions and fears of a global economic recession led by China.

On the other hand, the price of gold will not abandon its downward path without returning to the resistance around $1,945 per ounce. The price of gold today will be affected by the level of the US dollar the reaction to US data and the policy of the European Central Bank.

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