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Gold Price Forecast: XAU/USD Holds Above $1,640 Amid Fed Pre-Anxiety, PMIs Eyed

by Elena Martin   ·  October 31, 2022   ·  
Amidst uncertain sentiment in the market, the price of Gold is now bidding higher than the $1,640.00 support level. It is anticipated that the Federal Reserve will raise interest rates for the fourth time by 75 basis points. It is anticipated that the ISM Manufacturing PMI data will come in lower than the consensus estimate, which may affect the DXY.

In the Tokyo session, the gold price (XAU/USD) was disappointing as the market impetus produced mixed replies. Following the footsteps of the rangebound US dollar index, the price of the precious metal is now trading in a tight band between $1,640.60 and $1,644.25. (DXY).

The gains that the S&P 500 futures saw on Friday have been maintained, although there has been a little retracement in Tokyo, which does not seem to be substantial. On the other hand, the alpha produced by US government bonds is showing signs of improvement. The yield on the 10-year US Treasury note has reached 4.04% recently.

Gold prices are not moving significantly higher or lower because investors are staying on the sidelines due to worry over the monetary policies of the Federal Reserve (Fed). According to the CME FedWatch tool, the probability of a rate increase of 75 basis points (bps) now sits at 82.3%. Goldman Sachs, a significant investment banking business, has vouched for a rate rise of 75 basis points (bps) this week and sees the intended terminal rate beyond 4.75 percent and up to 5 percent.


Aside from that, the PMI data released on Tuesday also bears substantial relevance. According to the forecasts, the ISM Manufacturing PMI data is anticipated to be lower than the previous release of 50.9, coming in at 50.0 instead. In addition, the ISM New Orders Index will be an essential trigger that reflects ahead demand. This index is anticipated to be much higher at 49.1 compared to its previous 47.1.

Technical analysis of Gold

The price of Gold is hovering close to the weekly low of $1,638.15 that was achieved on Tuesday. This can be seen on an hourly basis.

The price of Gold is now trading below the 20- and 50-period Exponential Moving Averages (EMAs), respectively, located around $1,644.54 and $1,655.63, adding to the negative potential.

Meanwhile, the Relative Strength Index (RSI) (14) is encountering resistance at the level of 40.00, which suggests that the momentum toward a lower price is still active.

Hourly Gold Chart


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