· Gold Price Forecast: XAU/USD holds steady above $1,760 level, US CPI/FOMC minutes awaited
Gold edged higher for the second consecutive session on Wednesday, albeit lacked follow-through and remained below the overnight swing highs. Currently trading just above the $1,760 level, a modest US dollar weakness was seen as a key factor that extended some support to the dollar-denominated commodity. Apart from this, the prevalent cautious market mood – amid concerns about the return of stagflation – further acted as a tailwind for the safe-haven precious metal. Investors remain worried that the recent widespread rally in commodity prices will stoke inflation and derail the global economic recovery.
Meanwhile, a slight USD pullback lacked any obvious fundamental catalyst and seems cushioned amid expectations that the Fed will begin tapering its bond purchases in November. The markets have also started pricing in the possibility of a Fed rate hike in 2022 to counter the risk of inflation becoming too high. This was evident from elevated US Treasury bond yields, which should help limit any meaningful USD downside and hold traders from placing aggressive bullish bets around the non-yielding gold. Investors now await the release of US consumer inflation figures to gauge the Fed's path on normalizing monetary policy.
This will be followed by the FOMC monetary policy meeting minutes, later during the US session. A stronger CPI print and (or) a more hawkish Fed could bring additional gains for the US currency and provide a fresh directional impetus to gold prices. In the meantime, the broader market risk sentiment, along with the US bond yields will be looked upon for some short-term trading opportunities around the commodity.
Technical levels to watch
From current levels, the overnight swing highs, around the $1,769-70 region, might continue to act as immediate strong resistance. Some follow-through buying has the potential to lift gold back closer to the $1,783-84 horizontal barrier. A sustained strength beyond should allow bulls to aim back to reclaim the $1,800 round-figure mark.
On the flip side, the $1,750 area has emerged as immediate strong support. A convincing break below might prompt aggressive technical selling and accelerate the slide towards September monthly swing lows, around the $1,722-21 region. Gold could eventually drop to test the $1,700 mark en-route August monthly swing lows, around the $1,687 region.
· Gold Price Forecast: XAU/USD to sink towards $1565/60 on a break below $1691/77 – Credit Suisse
Gold extends its consolidation beneath the July and August highs at $1832/34. In the view of strategists at Credit Suisse, XAU/USD would suffer a significant drop on a break below $1691/77.
XAU/USD needs to surge above $1834/49 to enjoy a substantial recovery
“Although downward pressure is seen increasing, only below $1691/77 would mark a major top for an important change of trend lower, with support then seen at $1620/15 initially, before $1565/60.”
“Only a break above $1834/49 would be seen to complete an inrange base to clear the way for a deeper recovery to $1917.”
· Dollar eases from one-year high before CPI data as Fed clues sought
The dollar eased back from a one-year high versus major peers on Wednesday ahead of U.S. consumer price data that could provide additional clues on when the Federal Reserve will taper stimulus and raise interest rates.
The dollar index, which measures the greenback against six rivals, slipped 0.18% to 94.358 from Tuesday, when it touched 94.563 for the first time since late September 2020.
The U.S. currency weakened 0.13% to 113.465 yen, down from a three-year high of 113.785 yen reached in the previous session.
The euro climbed 0.18% to $1.1551, off Tuesday’s $1.1522, its lowest in nearly 15 months.
Most Fed policymakers continue to say inflationary pressures will prove transitory.
Governors Lael Brainard and Michelle Bowman are among the Fed officials due to speak later Wednesday, when the minutes of the central bank’s September meeting are also due to be released.
· China's yuan firms on strong Sept export growth
In the spot market, the yuan opened at 6.4509 per dollar and was changing hands at 6.4456 at midday, 16 pips stronger than the previous late session close.
· China trade surplus with the U.S. rises to monthly record in September
Imports in U.S. dollar terms rose 17.6% last month from a year ago to $240 billion. That’s less than the 20% estimated by analysts polled by Reuters.
China Sept export growth unexpectedly picks up, imports slow
China’s trade surplus with the U.S. rose to a monthly record of $42 billion — exports surged by about 30% from a year ago, while imports climbed by just under 17%. The U.S. remained China’s largest trade partner on a single-country basis.
· China Sept copper imports snap 5-month fall as delayed shipments arrive
· Festering Evergrande contagion worries push China spreads to record
Worries over possible spiralling effects of a debt crisis at developer China Evergrande Group drove Chinese high-yield spreads to record highs on Wednesday, days after the company missed another dollar bond deadline.
· China developers' bonds, shares hit again by Evergrande contagion worries
Shares and bonds of Chinese property companies fell further on Wednesday after China Evergrande Group missed a third round of interest payments on its dollar bonds in three weeks, and as others warned of defaults.
· China calls military drills near Taiwan a ‘just’ move
Chinese military exercises near Taiwan are targeted at forces promoting the island’s formal independence and are a “just” move to protect peace and stability, China’s Taiwan Affairs Office said on Wednesday.
· UK economy picks up in August, underpinning BoE rate hike bets
Britain’s economy grew 0.4% in August, leaving it just 0.8% smaller than it was in February 2020, just before the country went into its first COVID-19 lockdown, the Office for National Statistics said on Wednesday.
· German yields near 5-month highs ahead of U.S. inflation data
By 0709 GMT, Germany’s 10-year yield was unchanged at -0.10% after rising to -0.085%, its highest since late May.
· Austria plans budget deficit of 2.3% for next year
· Singapore’s ‘vaccinated travel lanes’ spark a surge in flight searches, says Expedia
· Pandemic has disrupted retirement plans for 35% of Americans, study finds
Reference: Reuters, CNBC, FXStreet
Thai
Eng