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Gold Price Forecast: XAU/USD confronts resistance above $1,650 as the DXY recovers and fears of a recession loom

Alina Haynes

Oct 18, 2022 11:39

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In the Tokyo session, the gold price (XAU/USD) has encountered selling pressure while attempting to hold above the $1,650.00 barrier. The precious metal's backward movement has ended as the US dollar index (DXY) has regained following a decline to about $1,646.83 during the late New York session.

 

The DXY has regained bids about 112.00 after lingering under the control of bears. However, the risk-taking attitude persists. The S&P500 futures are maintaining their overnight gains on a positive Monday. In addition, 10-year US Treasury rates fluctuate below the key level of 4%. As hawkish Federal Reserve (Fed) monetary policy wagers remain strong, the yellow metal may resume its decline towards $1,640.00 in the near future.

 

According to the CME FedWatch tool, the probability of a fourth straight 75-bps increase in interest rates is 99.1%.

 

Meanwhile, recession fears have increased following J.P. Morgan's bearish commentary. Regarding financial instruments, Morgan. J.P. Morgan strategists According to Reuters, Morgan is reducing their delivery longs in equities and their underweight position in bonds because to the increasing possibility that central banks may make a hawkish policy blunder.

 

On an hourly scale, gold prices have gained substantial selling pressure in a number of efforts to surpass the highest auction zone located between $1,661.70 and $1,684.50. At $1,654.43, the precious metal has detected resistance at the 20-period exponential moving average (EMA).