Weekly Outlook on Gold - 29 September 2023

Gold prices are facing sustained pressure despite a backdrop of dollar weakness, a rare occurrence that coincides with a decline in yields on US Treasuries. Typically, the strength of the dollar and higher yields have been key components of the Federal Reserve's hawkish monetary policy.

On the COMEX division, the most active Gold future contract has experienced a notable decline over the first four days of this week. Today, price opened at $1883.55, reaching a high of $1890.55, a low of $1879.65, and currently fixing at $1885.20. 

Gold Prices under strain amid unusual Dollar weakness and Federal Reserve's hawkish stance

The recent strength of the dollar is a direct result of the Federal Reserve's stark announcement last week, signaling its intention to maintain elevated interest rates for a more extended period than previously assumed just a week ago. Economic projections from last week's FOMC meeting indicate that the Federal Reserve anticipates a terminal rate of approximately 5.6% by the end of the year, suggesting a high probability of another rate hike.

As gold continues to trade under pressure, market dynamics reflect the complex interplay between dollar movements, Treasury yields, and the evolving monetary policy landscape shaped by the Federal Reserve's announcements. Investors are closely monitoring these factors as they navigate the implications for gold prices in the coming weeks.

MCX Gold experienced a significant correction this week, marked by a Symmetrical Triangle breakout and a shift below the 200-days SMA on the daily scale. The weekly correction stands at -1.5%, with the trading at the 58000 mark during the Friday session. These technical indicators suggest a potential continuation of the downtrend. Traders are advised to adopt a sell-on-rise strategy for the upcoming week, closely monitoring U.S. inflation figures, Non Farm Payroll data, DXY (U.S. Dollar Index), and movements in bond yields for additional market insights and trading decisions.

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