Gold Price News and Forecast: XAU/USD is testing a key support level as it trades 1.82% lower on Wednesday
|Gold Price Analysis: Elliott Wave downside targets point to the $1767 area
The commodities complex is taking another hit on Wednesday after a tough start to the week. The recent persistent greenback strength has been a thorn in the side of the precious metal since the dollar consolidation began. Now there is a breakout to the upside in the dollar, gold is testing the support area which is the consolidation low.
The first place to start is the retracement from the all-time high. After the pullback the price retraced and the second wave up hit USD 2015.65 per troy ounce. This pullback stopped short of the 76.4% retracement but is still the Elliott Wave 2 starting point.
Gold, dollar and rates: A correlated story
Mining production? No. China’s consumer demand? No. The main drivers of gold prices are, as I’ve repeated many times, the US dollar and real interest rates. You don’t believe it? You don’t have to – just look at the charts below.
The first one displays the greenback and the dollar-denominated price of gold. Because other series start much later, I used here the Trade Weighted U.S. Dollar Index against major currencies that circulate widely outside the country of issuance. Although the correlation is not perfect, the inverse relationship is quite strong and bull and bear markets in gold coincide with the bear and bull trends in the U.S. dollar.
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