Gold Price Forecast: XAU/USD’s bearish potential appears intact, eyes on critical US NFP
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UNLOCK OFFER- Gold Price looks vulnerable as the safe-haven US dollar remains broadly favored.
- Less hawkish Fed-led blow heals, as US Treasury yields hold near three-year highs.
- A potential bearish wedge on gold’s 4H chart could challenge any upside attempts.
Nothing can stop the US dollar dominance, which appeared the key underlying theme on Thursday, as markets went on a ‘sell everything’ spree after the BOE warning, Chinese and US business PMIs suggested heightening risk of an incoming recession. The BOE raised the Bank Rate by 25 bps to 1%, although projected a recession in the final quarter of 2022. Gold Price was thrashed alongside the Wall Street indices and the US bonds. XAU/USD also bore the brunt of the renewed uptick in the US Treasury yields, with the benchmark 10-year Treasury yields hitting fresh three-year highs near 3.10%.
In the first half of Thursday’s trading, Gold Price did extend the previous rebound to reach fresh four-day highs of $1,910, as the dollar extended the less aggressive Fed-led correction. The Fed, on Wednesday, hiked the rates by 0.50% as expected but outrightly shrugged off a 0.75% June rate hike.
Gold Price is trading on the defensive so far this Friday, as traders move on the sidelines ahead of the all-important US Nonfarm Payrolls release. The US economy is likely to have added 391K jobs in April vs. 431K created previously. A stronger than expected print is needed for the dollar bulls to continue Thursday’s rebound, drowning Gold Price towards the 200-Daily Moving Average (DMA) at $1,835. A dismal reading, however, could justify the Fed’s less hawkish stance, prompting the greenback to resume its correction from multi-year highs while benefiting Gold Price. A bunch of speeches from the Fed policymakers will be also closely followed for fresh hints on the interest rates outlook and, thus, the gold price direction.
Gold Price Chart: Four-hour chart
Gold Price briefly tested waters under rising trendline support at $1,872, earlier on, before bulls jumped back into the game.
The latest bounce in gold price has led bulls to reclaim the latter while extending the renewed upside above the critical horizontal 21-Simple Moving Average (SMA) at $1,874.
If gold buyers manage to hold above the 21-SMA support, then the road to recovery could challenge the bearish 50-SMA at $1,886.
The next significant resistance is pegged at the $1,900 round level, above which the rising wedge upper barrier at $1,912 will be probed.
On the flip side, a sustained break below the abovementioned (wedge) trendline support at $1,872 will validate the bearish continuation formation.
A retest of the three-month low of $1,850 will be on the table should the $1,860 demand area cave in.
The Relative Strength Index (RSI) is sitting just beneath the midline, supporting the bearish bias.
- Gold Price looks vulnerable as the safe-haven US dollar remains broadly favored.
- Less hawkish Fed-led blow heals, as US Treasury yields hold near three-year highs.
- A potential bearish wedge on gold’s 4H chart could challenge any upside attempts.
Nothing can stop the US dollar dominance, which appeared the key underlying theme on Thursday, as markets went on a ‘sell everything’ spree after the BOE warning, Chinese and US business PMIs suggested heightening risk of an incoming recession. The BOE raised the Bank Rate by 25 bps to 1%, although projected a recession in the final quarter of 2022. Gold Price was thrashed alongside the Wall Street indices and the US bonds. XAU/USD also bore the brunt of the renewed uptick in the US Treasury yields, with the benchmark 10-year Treasury yields hitting fresh three-year highs near 3.10%.
In the first half of Thursday’s trading, Gold Price did extend the previous rebound to reach fresh four-day highs of $1,910, as the dollar extended the less aggressive Fed-led correction. The Fed, on Wednesday, hiked the rates by 0.50% as expected but outrightly shrugged off a 0.75% June rate hike.
Gold Price is trading on the defensive so far this Friday, as traders move on the sidelines ahead of the all-important US Nonfarm Payrolls release. The US economy is likely to have added 391K jobs in April vs. 431K created previously. A stronger than expected print is needed for the dollar bulls to continue Thursday’s rebound, drowning Gold Price towards the 200-Daily Moving Average (DMA) at $1,835. A dismal reading, however, could justify the Fed’s less hawkish stance, prompting the greenback to resume its correction from multi-year highs while benefiting Gold Price. A bunch of speeches from the Fed policymakers will be also closely followed for fresh hints on the interest rates outlook and, thus, the gold price direction.
Gold Price Chart: Four-hour chart
Gold Price briefly tested waters under rising trendline support at $1,872, earlier on, before bulls jumped back into the game.
The latest bounce in gold price has led bulls to reclaim the latter while extending the renewed upside above the critical horizontal 21-Simple Moving Average (SMA) at $1,874.
If gold buyers manage to hold above the 21-SMA support, then the road to recovery could challenge the bearish 50-SMA at $1,886.
The next significant resistance is pegged at the $1,900 round level, above which the rising wedge upper barrier at $1,912 will be probed.
On the flip side, a sustained break below the abovementioned (wedge) trendline support at $1,872 will validate the bearish continuation formation.
A retest of the three-month low of $1,850 will be on the table should the $1,860 demand area cave in.
The Relative Strength Index (RSI) is sitting just beneath the midline, supporting the bearish bias.
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