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Demand for Gold is Falling Again

9/1/2022 1:37 PM

Due to the strengthening of the USD Index to the high of the year at 109.000, the XAU/USD pair is correcting in a downtrend around 1705.0.

The reason for the positive dynamics of the US dollar was several factors, the key among which was the speech of the head of the US Federal Reserve, Jerome Powell, at the symposium in Jackson Hole. The official gave the markets a clear signal that the regulator will continue to raise interest rates until inflation is brought under control, after which the rate will be kept at a “stable level” for some time to consolidate the effect of the measures already taken. According to him, the restoration of price stability will require a decisive use of central bank instruments, so experts suggest that at the September meeting, the US Federal Reserve will raise interest rates by 75,0 basis points for the third time in a row. However, yesterday, the head of the Federal Reserve Bank of New York, John Williams, noted that the optimal level of the indicator is 3.5%, which hints at a possible adjustment immediately by 1.00%. A sharp rise in value is always a negative sign for gold.

Serious changes continue in demand for the metal from investors. According to the latest report from the US Commodity Futures Trading Commission (CFTC), last week, net speculative positions in the asset decreased to 125.8K from 141.2K contracts. If we pay attention to the activity of traders, then the sellers held the lead in cash-backed contracts, reducing them by 2,739K positions, while buyers liquidated only 99 contracts.


On the daily chart of the asset, the trading instrument stays within the global downwards channel with dynamic boundaries 1770.0–1630.0. Technical indicators strengthen the sell signal: fast EMAs on the Alligator indicator are kept well below the signal line, and the AO oscillator histogram continues to fall in the sell zone.

Resistance levels: 1721.0, 1770.0. | Support levels: 1696.0, 1650.0.



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