- Gold price retreats from a one-week high touched this Monday, albeit lacks follow-through.
- The cautious market mood underpins the safe-haven XAU/USD amid a modest USD downtick.
- The upside remains capped as traders await this week’s rate decisions by major central banks.
Gold price continues with its struggle to make it through the $1,930 resistance zone and pulls back from a one-week high touched earlier this Monday. The XAU/USD, however, manages to hold in the positive territory for the second successive day and trades around the $1,925 region, up just over 0.10% during the first half of the European session.
The US Dollar (USD) remains on the defensive below its highest level in more than six months touched last week and is seen as a key factor lending some support to the Gold price. Apart from this, concerns about a United States (US) government shutdown, along with the worsening property crisis in China, underpin the safe-haven precious metal. In fact, China Evergrande Group delayed a decision to restructure its debt. Furthermore,
some of the employees of the struggling developer’s wealth management unit were detained by police in southern China. This comes on the back of China’s conservative approach to introducing more stimulus measures and tempers investors’ appetite for riskier assets.
The downside for the USD, meanwhile, remains cushioned as traders seem reluctant to place aggressive bets and prefer to wait for the latest monetary policy update by the Federal Reserve (Fed). This, in turn, keeps a lid on any meaningful appreciating move for the US Dollar-denominated Gold price. The Fed is scheduled to announce the outcome of a two-day monetary policy meeting on Wednesday and is widely anticipated to maintain the status quo. The markets, however, are still pricing in the possibility of one more 25 basis points (bps) lift-off by the end of this year, either in November or December. Hence, the market focus will remain glued to the accompanying monetary policy statement.
Apart from this, investors will closely scrutinize Fed Chair Jerome Powell’s comments at the post-meeting press conference for fresh cues about the future rate-hike path. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh impetus to the Gold price. Market participants this week will also confront a string of rate decisions by other major central banks – the Swiss National Bank (SNB) and the Bank of England (BoE) on Thursday, followed by the Bank of Japan (BoJ) on Friday. Apart from this, the latest consumer inflation figures from Canada and the United Kingdom (UK) on Tuesday and Wednesday, respectively, might contribute to producing trading opportunities around the XAU/USD.
Technical levels to watch