Gold Price Forecast: XAU/USD at risk of extending its near term decline
|XAU/USD Current price: $1,965.55
- US Federal Reserve officials warned speculators about betting on the end of monetary tightening.
- Wall Street shrugged off the negative tone of its overseas counterparts, holds on to intraday gains.
- XAU/USD is at risk of extending its slide, although the bearish potential remains limited.
Fresh US Dollar demand sent XAU/USD down to $1,956.65 a troy ounce on Tuesday, with the bright metal trading in the red at around $1,965. The US Dollar recovered amid a souring market mood, as Federal Reserve (Fed) officials reminded speculative interest monetary tightening may not be over.
Speaking at different events, Federal Open Market Committee (FOMC) members agree that inflation has eased but that additional rate hikes may be required to bring inflation back to the 2% target. Financial markets turned cautious despite the risks of economic growth poised by record rates.
Still, the Greenback pared gains after Wall Street’s opening, as United States (US) indexes shrugged off the poor performance of their overseas counterpart and turned grind. Meanwhile, US Treasury yields remain subdue, losing a few basis points after Monday’s uptick.
XAU/USD short-term technical outlook
From a technical perspective, the daily chart for XAU/USD suggests the metal could extend its decline, particularly if it slides below $1,953.53, the October 24 intraday low and the immediate support level. The pair bounced after briefly piercing a bullish 20 Simple Moving Average (SMA), limiting the bearish potential. Nevertheless, technical indicators head south almost vertically and are about to pierce their midlines, in line with another leg south.
In the near term, and according to the 4-hour chart, the risk skews to the downside as the pair extended its slide below a now flat 100 SMA. The 20 SMA, in the meantime, gains bearish traction above the longer one, signaling increasing selling interest. Technical indicators stand well into the red, although they have lost their downward strength.
Support levels: 1,953.50 1,945.20 1,932.60
Resistance levels: 1,978.30 1,989.00 2,006.70
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