Gold Price Forecast: XAU/USD eyes a fresh downswing towards $1,650 and Fed minutes – Confluence Detector
- Gold price is challenging critical support at $1,660, with more downside in the offing.
- US dollar cheers risk aversion, Treasury yields rebound while weighing on the metal.
- XAU/USD gears up for a test of $1,650 on a sustained move below key $1,660 support.
Gold price remains at the mercy of the dynamics of the US dollar and Treasury yields, as investors brace for the key US event risks, in the form of Wednesday’s FOMC minutes and Thursday’s inflation data. The greenback continues to capitalize on persistent risk aversion, fuelled by China’s renewed covid surge, Russia-Ukraine tensions and recession fears. Meanwhile, markets see Fed committed to steeper rate hikes to tame inflation, which is also collaborating with the downside in the non-interest-bearing gold while boosting safe-haven demand for the dollar. Meanwhile, the benchmark 10-year US yields hover around the 4% level, keeping XAU sellers alive. Investors are pricing roughly 83% probability of a 75 bps November Fed rate hike, which is likely to be confirmed by the US inflation release on Thursday. In the meantime, risk trends and the FOMC minutes could influence the dollar, as well as, gold valuations in the near term, as markets watch out for the bond market action.
Also read: Gold Weekly Forecast: XAU/USD remains sensitive to US yields as focus shifts to CPI
Gold Price: Key levels to watch
The Technical Confluence Detector shows that the gold price is yearning for a sustained break below the critical support area at around $1,660, which is the convergence of the previous week’s low, the previous day’s low and Fibonacci 38.2% one-month.
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