Gold continues falling – by Monday 19 September, it has reached $1,664. Earlier, it rebounded from the resistance level at $1,680 to indicate how strong the bearish pressure still is. This week, investors are expecting another aggressive rate hike from the US FOMC to continue its fight against growing inflation. Market players believe that it will be a 75-point hike, but if the regulator raises the rate by 1%, it might force Gold to continue plummeting.
Despite the fact that Gold usually acts as a “safe haven” asset” when inflation rises, high interest rates increase expenditures to store physical Gold. At the same time, increasing economic risks do not inspire market players to buy such “safe haven” assets, making the USD a more preferable investment.
Since mid-2020, Gold has been stuck inside a sideways channel between $2,065 and $1,680. If bears succeed to keep the metal at the current levels (and there are no fundamental reasons that might hint at a possible reversal so far), Gold might plummet to $1,300 in the long-term.
As we can see in the H4 chart, after rebounding from 1730.00, XAU/USD is forming another descending wave towards 1646.00. Later, the market may start a new growth with the target at 1727.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 outside the histogram area. In the future, the line may reverse and grow towards 0.
In the H1 chart, Gold continues trading downwards with the short-term target at 1650.00. Later, the market may grow towards 1690.00 and then resume falling to reach 1646.00. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: its signal is moving below 20 and may soon grow towards 50. After that, the line may resume falling to return to 20.
