Gold Prices Forecast: XAU/USD Wobbles Amid Rate Hike Fears

James Hyerczyk
Published: Nov 13, 2023, 07:41 GMT+00:00

Amid interest rate speculations, Gold (XAU/USD) navigates a tumultuous market, influenced by the U.S. dollar and CPI data.

Gold Prices Forecast

In this article:


  • Gold (XAU/USD) hits a three-week low amid a strong U.S. dollar.
  • Fed Chair Powell’s hawkish stance impacts gold prices.
  • U.S. CPI data crucial for gold’s future direction.

Gold’s Short-Term Outlook Amid Interest Rate Speculations

Gold (XAU/USD) is currently trading in a challenging landscape, marked by its recent slump to a three-week low. This downturn coincides with a resilient U.S. dollar and the anticipation of key U.S. inflation (CPI) data, which traders are closely monitoring to gauge the Federal Reserve’s next move on interest rates.

At 07:25 GMT, Gold (XAU/USD) is trading $1938.96, up $0.575 or +0.03%. December Comex Gold futures are at $1942.80, up $5.10 or +0.26%.

Inflation Data and the Dollar’s Impact

Last week’s significant 2.8% drop in gold prices, the steepest in over a month, was primarily influenced by Fed Chair Jerome Powell’s hawkish remarks, which dampened hopes for interest rate cuts. The upcoming U.S. consumer price index (CPI) data, expected to show continued inflationary pressures, plays a critical role in this narrative. A strong dollar, further bolstered by expectations of persistent inflation, has diminished gold’s appeal for investors holding other currencies.

Economic Indicators and Gold’s Response

As investors await the CPI release, attention is also turning to U.S. retail sales data, which will provide insights into consumer demand amid high borrowing costs. These economic indicators are crucial in shaping market expectations regarding the Fed’s ongoing battle against inflation and the subsequent impact on gold prices.

Short-Term Forecast: A Balancing Act

In the short term, gold’s direction seems to be hanging in the balance, influenced by the interplay of inflation data, the strength of the U.S. dollar, and economic growth indicators. While geopolitical risks and central bank purchases offer some support, the Fed’s monetary policy tightening cycle and the dollar’s direction are key factors to watch.

Gold’s Prospects in a Shifting Macro Environment

Looking ahead, the macroeconomic environment could turn favorable for gold. With the U.S. monetary tightening cycle nearing its end and the dollar potentially reaching its peak, we may see a moderation in U.S. 10-year yields and the dollar’s strength. This shift could bolster gold’s investment appeal, offering a ray of hope for its recovery in the near term.

Technical Analysis

Daily Gold (XAU/USD)

Gold (XAU/USD), currently at $1939.91, hovers just above its significant 200-day moving average of $1935.07, indicating a critical juncture that could dictate its short and long-term market direction.

This proximity to the 200-day average highlights a potential turning point; a sustained position above this level may confirm a longer-term bullish trend.

Additionally, its position above the 50-day moving average of $1923.28 reinforces this bullish sentiment in the shorter term.

The minor resistance level at $1952.21 presents the next test for gold’s upward momentum. If surpassed, it may pave the way to challenge the major resistance at $1987.00.

Conversely, a retraction would find initial support at $1930.64, with a more significant support level at $1904.01, which could act as key levels to maintain the current bullish outlook.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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