Gold is holding steady as the new week begins after rebounding from a monthly low ($1907). US Dollar weakness could keep the precious metal supported in September.
Gold hit its 50-Day SMA ($1912) for the first time in almost 3 months whilst still trading within August’s range. The price easing back from the record high ($2075) could be gold pausing for breath rather than the end of the bullish trend after the yellow metal has traded at fresh yearly highs each month this year, yet the moving average tracks the positive slope from an earlier period.
Gold shrugged off the latest US jobs report indicating that the price of gold will consolidate even as US Dollar traders return after the Labor Day public holiday. Furthermore, Gold could see range bound conditions as the Fed’s monetary policy meeting on September 16 comes into view and as the Fed prepares to release the updated Economic Projections (SEP).
The new forecasts could prompt a shift in monetary policy as the Fed weighs up an outcome-based approach versus a calendar-based forward guidance. With the US elections just 2 months way and the Fed planning to shift policy framework to ATR the Fed will most likely stick to the status quo
The FOMC may continue to “increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace,” combined with more of the same from the Fed Chair Jerome Powell support up gold prices as the Fed’s balance sheet pushed back above $7 trillion in August.
For now, gold could consolidate further as global equity indices come under pressure, with the NASDAQ 100 and S&P500 on shaky ground US Dollar weakness may continue to coincide with the stronger gold prices as a bear-flag formation emerges in the DXY index.
