Gold Price Forecast: XAU/USD tests $1,950 as investors drop safe-haven assets
|XAU/USD Current price: $1,956.70
- Global equities struggle for direction as policymakers cool down hopes for rate cuts.
- Federal Reserve Chair Jerome Powell could comment on monetary policy on Thursday.
- XAU/USD corrective slump could extend towards a critical Fibonacci support at $1,933.26.
Persistent US Dollar demand maintains XAU/USD under pressure, with the pair trading near a fresh two-week low of $1,950.93 a troy ounce. The bright metal eases amid comments from United States (US) and European central bank officials, down-talking odds for soon-to-come rate cuts while repeating the doors are open for additional tightening should inflation change course.
Global equities struggled for direction, although Wall Street maintains its positive tone, with major indexes posting modest gains. In the meantime, Treasury yields develop near their recent lows, raising concerns on whether US policymakers can trust higher yields to tighten financial conditions. Still, Wall Street’s continued advance maintains speculative interest away from the safe-haven Gold.
Federal Reserve Chair Jerome Powell delivered opening remains and participated in the Division of Research and Statistics Centennial Conference but made no comments about monetary policy. However, he will be again on the wires on Thursday, as he is due to participate in a panel discussion titled "Monetary Challenges in a Global Economy," in which he would be more likely to make relevant comments.
XAU/USD short-term technical outlook
From a technical point of view, the daily chart for XAU/USD shows the pair has room to extend its decline as it gains downward traction below a now flat 20 Simple Moving Average (SMA), providing dynamic resistance at $1,965.30. The longer moving averages, in the meantime, remain directionless, far below the current level, but technical indicators head firmly south, reflecting prevalent selling interest and hinting at another leg south.
XAU/USD is bearish in the near term. The 4-hour chart shows that technical indicators gain bearish momentum below their midlines, with the Relative Strength Index (RSI) indicator approaching oversold readings. At the same time, the 20 SMA is crossing below the 100 SMA, both at around $1,975 a troy ounce.
Finally, XAU/USD broke below the 23.6% retracement of its latest daily run between $1,810.41/$,009.34 at $1,962.20. The corrective decline could continue towards the next Fibonacci support at $1,933.26, while a break below the latter should anticipate a more sustained slump.
Support levels: 1,945.20 1,933.20 1,923.10
Resistance levels: 1,965.30 1,978.30 1,989.00
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