Gold Price is Under Siege – How Will it Move in September?

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Gold price (XAGUSD) is down by about 0.25% today as traders as traders continue to reflect on the statement by Jerome Powell last week. The metal is trading at $1,960, which is below this month’s high of $2,075. Gold seems to be the only outlier in the red today. Copper, platinum, and silver prices are up by 1.25%, 0.20%, and 0.80%, respectively.

Gold price has been under pressure after the price rose to an all-time high of $2,075 early this month. This has happened despite the conducive environment in the gold industry. For example, Warren Buffett, who has long criticised gold recently invested in one of the biggest miners.

Also, interest rates in the United States are at historic lows, which tends to be positive for the price of gold. And in a statement last week, the Federal Reserve chair reiterated that rates will remain this low for the next few years.

Meanwhile, global debt is rising. In the United States alone, the national debt has jumped to more than $26 trillion. That is a substantial high level considering that the debt was less than $10 trillion a year ago.

Most importantly, corporate debt has surged to trillions of dollars. All this has led to real yields on US companies to fall to the negative territory. Indeed, the real yield on some high-quality corporate bonds have moved below zero, according to the Financial Times. Also, real yields on government bonds has been negative this year.

The decline in gold price could be because some investors are fearful about the recent rally that has pushed the price to an all-time high. In this, they believe that the path of least resistance could be lower.

So, is gold price headed higher?

Gold price technical outlook

The daily chart shows that gold price has faced a lot of resistance after it reached its all-time high of $2075. The price remains above the 50-day and 100-day EMAs while the Average True Range (ATR) has lost momentum. The ATR is a good measure of volatility. At the same time, the price seems to be in consolidation that is shown in green.

At this point, the outlook of the XAUUSD pair is neutral, with the key support and resistance levels being at 1,858 and 2,000 respectively. Still, because of the bearish engulfing pattern that happened early this month, I suspect that the price will break out lower.

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