Gold Price Forecast: XAU/USD dives to fresh three-week lows below $1,630
- Gold accelerates its decline and hits fresh three-week lows below $1,630.
- The USD rallies on Fed tightening hopes and higher US yields.
- XAU/USD focusing on $1.614 or lower – Credit Suisse.
Gold futures accelerated their downtrend on Wednesday to reach fresh three-week lows right below $1,630. The yellow metal dives nearly 1.5% so far today on the back of a strong USD recovery as risk appetite waned.
Fed tightening hopes and higher bond yields boost the USD
After the moderate decline of the previous two days, the dollar is going through a solid recovery on Wednesday. The USD has bounced back amid a sourer market mood and the rebound on US Treasury bond yields. The benchmark 10-year bond yield has jumped to 4.12%, its highest level since the 2007 crisis
Beyond that, the investors have shifted their focus to the Federal Reserve’s monetary policy meeting due on November 1 and 2. With the market anticipating another 75 basis point hike, the aggressive tightening cycle of the US central bank is acting as a tailwind for the USD.
The USD has regained most of the ground lost over the previous two days. The US Dollar Index bounced up from levels right below 112.00 and has rallied beyond 1% on the day, returning to the 113.00 area at the time of writing.
XAU/USD: Next support is $1,614 – Credit Suisse
Analysts at Credit Suisse point out that gold futures have activated a double top, which anticipates further declines: “Gold below $1,691/76 has reinforced its existing large ‘double top’. Hence, with a top in place, we expect gold to come under renewed pressure. We note that the next support is seen at $1,614, then $1,560, and eventually $1,451/40.”
Technical levels to watch