XAU/USD Price Analysis: Trouble for Gold As a New Bearish Pattern Emerges

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Azeez Mustapha

Updated: 13 October 2022

Gold (XAU/USD) appears to be trading under a depressing sentiment on Monday, following the scanty reaction to the Federal Reserve interest rate decision. Meanwhile, fresh statements from Fed officials later today might keep the yellow metal afloat as the apex bank has vowed to “increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace.”

After having faced strong rejection above the $1950 severally, gold was met with renewed selling pressure, which has erased about $25 from the commodity’s price in just a few hours.

The bearish pressure seen in the yellow metal can be mainly traced to the across-board rebound in the US dollar (DXY), as risk sentiment tightens its hold on Europe as Coronavirus continues to wreak havoc.

Also, it appears that market participants are holding the US currency ahead of the Fed Chair Jerome Powell’s speech scheduled for later on Monday. It is expected that the Fed will maintain its dovish outlook, even into its next interest rate decision on the 5th of November, as the committee remains committed to using everything in their arsenal to bolster the economy in these trying times.

Gold (XAU) Value Forecast — September 21

XAU/USD Major Bias: Bearish

Supply Levels: $1940, $1950, and $1960

Demand Levels: $1923, $1909, and $1900

Gold has now been caught in a very tough bearish momentum on Monday as market risk picks up. The yellow metal has now formed a new downward-facing channel and is currently at the base of this channel. To break out of this downward spiral, gold will first have to break above $1950, where a confluence of technical indicators lay (strong supply level, 50 SMA, and the top of our newly formed channel).

Subsequently, other resistance levels will come into the target. Failure to do so means the commodity risks reaching the $1900 psychological support again.

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