GOLD PRICE EASES AS DUST SETTLES OVER THE MARKET MAYHEM

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  • Markets are starting to calm down after the volatile ride on Monday. 
  • A Fed rate cut in September is fully priced in while policymakers try to calm markets. 
  • The RSI is back in the middle of its range, offering room for some bulls to enter the market again. 

Gold’s price (XAU/USD) stabilizes below the $2,400 level on Wednesday after easing for two consecutive days at the beginning of the week following Monday’s market mayhem. The move comes with the US Dollar (USD) starting to gain strength again after several comments from the Bank of Japan (BoJ) on Wednesday morning that could leave traders rather puzzled. US yields are jumping higher, a stronger US Dollar is in play and the stock markets are behaving positively for a second day in a row. This is ideal for a cool down in Gold’s price action and room to assess what is next.

Although this soothing sentiment in markets is not ideal for the Gold price, plenty of tail risks are still to be considered. Geopolitical tensions in the Middle East could rip through the region into a full-fledged war at any moment. Lacklustre export data from China adds to the already poor performance in the region, and the People’s Bank of China (PBoC) or its government may soon take action to boost activity, export, and economic growth again. Should US yields and its interest rate differential against other currencies widen again, XAU/USD might return to its bullish pattern from earlier this year. 


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