During Thursday’s Asian trading session, the yellow metal Gold price failed to stop its previous-day downward rally and remained depressed around the $1,760 level as the Fed hints at faster-than-expected interest rate hikes. On Thursday, the gold price forecast remained bullish above the 1,770 support level, the 38.2% Fibonacci retracement mark.

The US Federal Reserve handed down its latest policy decision yesterday and said that asset tapering could start as soon as November. It could also hike interest rates in 2022 to tackle rising inflation. However, the Fed’s hawkish turn pushed the US dollar to its highest level in a month and contributed to the yellow-metal losses. 

Meanwhile, the market’s upbeat sentiment put some further burdens on the safe-haven metal. The market trading mood was being supported by the mild positive headlines concerning China’s troubled real-estate firm Evergande. Apart from this, the US Federal Reserve’s (Fed) economic optimism and tapering plan signals also played a major role in underpinning the marker trading mood. 

Thus, the risk-on mood dented demand for the non-yielding yellow metal and prompted aggressive selling. Currently, the yellow metal price is trading at 1,764.71 and consolidating in the range between 1,760.83 and 1,769.56.

FOMC’s Monetary Policy Announcements & Mixed Chatter Over Evergande:

The market’s trading sentiment maintained its early-day positive performance and remained well bid on the day. It was supported by the mild positive headlines concerning China’s troubled real-estate firm Evergande. That said, the company Chairman tries to satisfy bears with comments like, “The firm will try its best to resume work and production.” 

The China Communist Party’s (CCP) deal with the struggling real-estate player Evergrande and the People’s Bank of China’s (PBOC) heavy liquidity shot boosted market sentiment. China Evergrande Group (HK:3333) temporarily eased fears about an imminent market shock from its debt crisis. The property developer reached an accord to settle interest payments on a domestic bond.

In addition to this, the US Federal Reserve’s (Fed) economic optimism and tapering plan signals also played a major role in underpinning the market’s trading sentiment. The US Federal Reserve (Fed) kept the benchmark rate at 0.25%, matching market expectations, but policymakers were divided on the hike, with policymakers now expecting a hike in 2022 or 2023 rather than the previous support for 2023. The Fed hinted that asset tapering could start as soon as November. It could also hike interest rates in 2022 to tackle rising inflation. 

Among these bets, the S&P 500 futures hit 4,400, up 0.35% intraday on Thursday., the risk-on market mood, as represented by a generally positive tone around the equity markets, was seen as a key factor that acted as a headwind for the safe-haven yellow metal.

Stronger Dollar Continues To Pressure On Gold

Despite the risk-on market sentiment, the broad-based US dollar maintained its early-day upward streak and hit its highest level in a month as the US Federal Reserve showed a willingness to start asset tapering and raise interest rates a lot sooner than its developed market peers. So, the upticks in the US dollar held the gold prices lower as the price of gold is inversely related to the US dollar price. The US Dollar Index Futures that track the greenback against a bucket of other currencies rose by 0.01% to 93.470 by 10:44 PM ET (2:44 AM GMT).

Looking forward, market traders will keep their eyes on mixed headlines over Evergrande. In the meantime, the US Preliminary Manufacturing and Services PMIs and the Bank of England (BOE) meeting will also be crucial to watch. 

Gold 4-Hour Timeframe

Gold Price Forecast – Daily Support And Resistance

S3 1728.27

S2 1750.87

S1 1759.62

Pivot Point 1773.47

R1 1782.22

R2 1796.07

R3 1818.67

Gold Price Forecast – 61.8% Fibonacci Retracement In Play

On Thursday, the gold price forecast remained bullish above the 1,770 support level, the 38.2% Fibonacci retracement mark. The closing of candles above the pivot point support level of 1773 provides significant resistance to gold. 

On the bearish side, gold’s immediate support prevails at a 1,759 level, which is being extended by a 23.6% Fibonacci retracement level. Further on the lower side, the breakout of 1,759 levels exposes gold prices towards the next support level of 1,725 level. 

Currently, gold is gaining support above the 50 days EMA (exponential moving average). The breakout below 1,759 can drive a selling trend in gold. Alternatively, the failure to break below 50 EMA can drive a bullish trend in gold until the 1,784 level. 

The leading indicator, Stochastic RSI, remains below 50, indicating a robust selling trend in gold. Therefore, Forex trading market participants may buy above the $1,760 level to target the $1,776 and $1,785 levels. Alternatively, traders can take a sell position below $1,770 level today. All the best!