Gold Price Forecast: XAU/USD rebound stalls near $1,800 amid US dollar pick-up
- Gold fades corrective pullback from weekly low, consolidates the heaviest daily fall in a month.
- Recently escalating coronavirus fears, US stimulus chatters underpin the US dollar’s safe-haven demand.
- Fedspeak, pre-ECB mood can keep markets sluggish but risk catalysts are the key to follow.
- Gold Price Forecast: U-turn from critical resistance area
Gold (XAU/USD) struggles to consolidate the heaviest daily losses in a month below $1,800, up 0.15% intraday near $1,797 ahead of Tuesday’s European session. That said, the precious metal snaps two-day fall despite recently easing from the day’s high.
Multiple failures to cross the key hurdle around $1,830-35 join the broad US dollar strength to keep gold sellers hopeful. The bearish impulse also takes clues from the commodity’s recent downside break of important technical levels.
The US Dollar Index (DXY) refrains from tracking the bond coupon to the south and refreshes the intraday high to 92.57 by the press time. Behind the DXY moves could be the ongoing grim concerns over the coronavirus and its economic impacts. The covid infections from Australia snapped a three-day downtrend while those from Germany rose 13,565 versus 6,726 the previous day.
The worsening of the COVID-19 conditions in the US pushes President Joe Biden towards a six-pronged strategy, the details of which will be out on Thursday and Friday. The same propelled the US 10-year Treasury yields to a two-month top on Tuesday, recently up a bit around 1.37%.
On a different page, US policymakers jostle over the much-awaited stimulus package as the bill inches closer to the passage, with the key hurdle ahead. Furthermore, the pre-ECB caution and mixed statements over the future performance of the Fed weigh on the market’s mood and favors the US dollar’s safe-haven demand.
It should be noted that the comments from the New York Fed President John C. Williams will be important to watch for intraday moves while Thursday’s monetary policy decision by the European Central bank (ECB), where the tapering is teased, becomes the crucial event of the week.
Technical analysis
While extending the pullback from the triple tops formed since mid-July, gold prices dropped below the monthly support line, now resistance, while also breaking the convergence of 100-day and 200-day EMA.
Having breached crucial EMAs and trend lines, XAU/USD remains directed towards an ascending support line from August 16, near $1,790.
However, any further weakness won’t hesitate to challenge June’s low around $1,750 whereas an extended fall past $1,750 could make the commodity vulnerable to aim for the yearly low surrounding $1,676.
On the contrary, the stated EMA confluence near $1,805 guards immediate upside of the metal ahead of the support-turned-resistance line close to $1,825.
It should be noted that the gold buyers remain skeptical unless witnessing sustained trading beyond the $1,832-34 horizontal resistance area.
Gold: Daily chart
Trend: Further weakness expected