2. Points To Be Discussed Today:
• Gold's Technical Outlook Turned Bearish
• Gold Faced Difficulty To Preserve Its Bullish
Momentum
• Gold May Fluctuate Between Key Technical
Levels
• Gold Spot/U.S. Dollar
• XAUUSD Chart
3. Gold's Technical Outlook Turned
Bearish
• Gold's technical outlook turned bearish
following Thursday's sharp decline.
• Next target on the downside for XAU/USD is
located at $1,730.
• FOMC will announce policy decisions and
release updated Summary of Economic
Projection.
4. Gold Started The Week Calmly &
Continued To Fluctuate
• Gold started the week in a relatively calm
manner and continued to fluctuate in the
previous week’s horizontal channel on
Monday.
• Although the precious metal managed to rise
above $1,800 on Tuesday, it came under
strong bearish pressure in the second half of
the week and fell to its lowest level in a month
at $1,745 on Thursday.
5. The XAU/USD
• The XAU/USD pair struggled to stage a
convincing rebound ahead of the
weekend
• And closed the second straight week in
the negative territory, losing nearly 2%.
6. The US Bureau Of Labor Statistics
• On Tuesday, the data published by the US Bureau of
Labor Statistics revealed that inflation in the US, as
measured by the Consumer Price Index (CPI).
• It edged lower to 5.3% on a yearly basis in August
from 5.4% in July as expected.
• Further details of the report showed that the Core
CPI, which excludes volatile food and energy prices,
fell to 4%, compared to analysts’ estimate of 4.2%,
from 4.3%.
7. Gold Faced Difficulty To Preserve Its
Bullish Momentum
• With this print suggesting that the Federal
Reserve could opt out to delay the reduction
in asset purchases.
• The greenback started to weaken against its
rivals.
• However, the risk-averse market environment
helped the US Dollar Index (DXY) limit its
downside and made it difficult for gold to
preserve its bullish momentum.
8. The FED Report
• The Fed reported on Wednesday that Industrial
Production in August expanded by 0.4%, falling
short of the market expectation of 0.5%.
• On a positive note, the Federal Reserve Bank of
New York’s Empire State Manufacturing Index
improved sharply to 34.3 in September from 18.3
in August.
• Although these prints failed to trigger a
significant market reaction, rising US Treasury
bond yields provided a boost to the USD mid-
week.
9. Announcement By US Census Bureau
• On Thursday, the US Census Bureau
announced that Retail Sales in the US
increased by 0.7% in August, beating the
market forecast for a contraction of 0.8% by a
wide margin.
• The robust data revived optimism about the
US economic recovery regaining traction and
allowed the USD to continue to outperform its
rivals.
10. Upsurge In 10-year US Treasury Bond
Yield
• Furthermore, the 3% upsurge witnessed in the
10-year US Treasury bond yield put additional
weight on XAU/USD’s shoulders, causing the
pair to lose than 2% on a daily basis.
• Finally, the University of Michigan (UoM)
Michigan's Consumer Sentiment Index edged
higher to 71 in September's advanced
estimate from 70.3 in August.
11. The DXY Extended Its Rally Ahead
• Market participants paid little to no
attention to this data and the DXY
extended its rally ahead of the weekend.
• Meanwhile, gold found some demand
amid the steep decline seen in the US
stocks and closed virtually unchanged on
Friday.
12. Gold May Fluctuate Between Key
Technical Levels
• The economic docket will not be offering any
high-impact data releases on Monday and
Tuesday and gold is likely to fluctuate between
key technical levels.
• On Wednesday, the Federal Reserve will
announce monetary policy decisions alongside
the updated Summary of Projections following
the FOMC’s two-day meeting.
13. Investors Eyes On Dot Plot
• Investors will keep a close eye on the dot plot,
which reveals policymakers’ rate outlook, and
inflation forecasts.
• More importantly, FOMC Chairman Jerome
Powell’s remarks at the press conference will
be looked upon for fresh hints regarding the
timing of asset tapering.
14. The Fed’s Tapering Prospects
• While speaking at the Jackson Hole Symposium, Powell
acknowledged that he thought at the July policy
meeting that it would be appropriate to start asset
tapering this year.
• Since then, the disappointing August jobs report, which
showed an increase of 235,000 in Nonfarm Payrolls
against the market expectation of 750,000, and the
dismal consumer sentiment surveys caused investors
to reassess the Fed’s tapering prospects.
• However, this week’s upbeat Retail Sales data makes it
hard to guess whether Powell will adopt a cautious
tone.
15. The Fed Will Start Reducing
• In case Powell unveils that the Fed will start
reducing asset purchases before the end of the
year, the USD is likely to gather strength and force
XAU/USD to turn south.
• On the other hand, a dovish outlook with the
chairman refraining from delivering a tapering
timeline could trigger a heavy USD selloff and fuel
a gold rally.
• On Thursday, the IHS Markit will release the
preliminary Manufacturing and Services PMI data
for the euro area, the UK and the US.
