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Gold Technical Analysis: Price of Gold is still Weak – 12 October 2022

The price of XAU/USD gold stabilized in Asian trading on Wednesday, after comments made by the Bank of England regarding the removal of emergency support to the market by the end of the week caused traders to worry, leaving investors’ sentiment fragile. The price of XAU/USD gold is now around the level of $1673 an ounce, after falling this week to the support level of $1661 an ounce. Bullion prices are down nearly 19% from their highest level of the year in March due to continued increases in US interest rates by the Federal Reserve and the prospects for more aggressive monetary policy tightening. The traditional haven is well below the $1,700 level, with geopolitical tensions and concerns about more global central bank action to counter inflation weighing on its price.


Bank of England Governor Andrew Bailey warned fund managers they have until the end of this week to finish trades they cannot hold before market support stops from additional pressure on the yellow metal price, sending Treasury yields and the US dollar higher. The non-yielding metal, which usually has a negative correlation with the dollar and rates, gave up gains of as much as 0.9% on Tuesday to end the session slightly lower

The focus turns to US inflation data due on Thursday for clues to the future path of the Federal Reserve’s rate hike, after the central bank signaled the possibility to proceed with its monetary tightening. Accordingly, Avtar Sandu, senior commodity manager at Phillip Nova, said in a note that “explicit inflationary bias” in upcoming data may boost expectations for another rate hike at the November meeting.

The general trend of the XAU/USD gold price is still bearish.Stability below the level of 1700 dollars an ounce supports this.The bears’ control over the trend will increase if the prices fall towards the support levels of 1655 dollars and 1638 dollars, respectively.It is better to buy gold, as the technical indicators will reach then towards selling saturated levels.

The price of gold may remain under downward pressure until the markets and the dollar react to the announcement of US inflation and retail sales figures and the reaction from the content of the minutes of the last meeting of the US Federal Reserve.

On the other hand, and according to the performance on the daily chart below, the stability of the gold price above the $1700 resistance will be an impetus for the bulls to start advancing and change the current bearish outlook.

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