Gold continues falling – on Monday, Sept. 19, it 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 expect another aggressive rate hike from the US FOMC to continue its fight against growing inflation. Market players believe it will be a 75-point hike, but if the regulator raises the rate by 1%, it might force gold to continue plummeting.
Even though 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 US dollar a preferable investment.
Since mid-2020, gold has been stuck inside a sideways channel between $2,065 and $1,680. If bears succeed in keeping 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.
Gold - Technical View
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 a target of 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 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.