Gold Is Too Much Affected By USD

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The Gold price is barely moving although the short-term market situation is not in favour of the precious metal. On Monday, 1 November 2021, the troy ounce costs $1,788. Gold has been rather volatile recently and definitely shows an inverse correlation to the USD.

It’s safe to say now that the Gold price will fluctuate pretty much this week in anticipation of the US Fed meeting. The regulator is slowly moving towards the reduction of the QE programme but this factor has already been included in the “greenback” price. If the Fed announces the QE reduction and hints at some more fiscal moves in the future, Gold may rise.

A lot of attention is currently paid to American inflation. If the CPI and its components continue growing, the demand for Gold as a “safe haven” asset will surely expand. The inflation rally calls into question the rate and prospects of economic growth and that won’t make market players happy.

As we can see in the H4 chart, after completing the correctional wave at 1774.05 along with the ascending structure towards 1781.10, XAU/USD is expected to start another decline to reach 1763.81. After that, the instrument may resume trading upwards with the target at 1830.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving downwards below 0 inside the histogram area. Later, the indicator is expected to continue falling towards new lows.

In the H1 chart, Gold has finished the descending wave at 1772.00 along with the ascending structure towards 1787.60. Possibly, the metal may form a new consolidation range below the latter level. If later the price breaks this range to the downside, the market may resume falling to reach 1765.56 or even extend the correction down to 1750.00. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: after breaking 50 to the downside, its signal is expected to continue moving downwards to reach 20.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.