Gold price dropped to its lowest level in over a month earlier on Thursday as the market digested the Fed interest rate decision released on Wednesday. As at the time of writing, the precious metal was trading at $1,630.90; down by 0.27%.
Fundamentals
A hawkish Fed and concerns over the growth of the global economy continue to strengthen the US dollar; an aspect that has maintained gold price below the previously steady support level of $1,700 per ounce. Following the Fed interest rate decision delivered on Wednesday, Jerome Powell noted, “it’s very premature, in my view, to think about or to be talking about pausing our rate hikes”. An environment of high interest rates has been weighing on the non-yielding bullion while boosting Treasury yields and the greenback.
On the data front, the US jobs report scheduled for release on Friday will offer directional cues for gold price. Economists expect 200,000 jobs to have been added to the US economy in October. This would represent the weakest growth since December 2020. If the figure comes in lower than in the previous month, it will likely ease bets over the Fed’s interest rate hikes. Subsequently, it may yield a decline in the US dollar while boosting gold price.
Gold price prediction
As shown on its daily chart, gold price has continued to trade below the 25 and 50-day exponential moving averages (EMAs). Besides, its relative strength index (RSI) is at 40, which is significantly below the neutral level of 50.
A look at these technical indicators, coupled with the fundamentals, points to further losses into the coming week. In fact, in the case of a rebound, it will be more of a corrective one. From this perspective, I expect gold price to remain below the once steady support level of 1700.
More specifically, the range between the 25-day EMA at 1,657.75 and the support level of 1,628.08 will be worth watching. Even with the probable weak growth in US jobs, a rebound will likely be curbed at the resistance level at 1,680. On the flip side, a strong US jobs report will give the bears an opportunity to retest the YTD low at 1,615.86.
