Gold Price Forecast: Battle around $1,700 continues

Valeria Bednarik FXStreet

XAUUSD Current price: $1,714.10

Concerns about global economic growth maintained the dollar bid.
Investors remain concerned about a potential global economic recession.
XAUUSD bounced from sub-$1,700, but the bullish potential is quite limited.

Spot gold changed course after falling to $1,691.32 at the beginning of the day, now hovering around $1,710. The dollar surged throughout the first half of the day amid persistent concerns of a global recession fueled by tepid Chinese data. China reported a trade surplus of $79.39 billion in August, well below the $101.26 billion from July. Asian and European shares fell, underpinning the greenback, despite easing government bond yields interrupted its rally.

Also, concerns gravitate around the European energy crisis and the risks of a steeper economic setback in the Union amid the growing risk multiple industries may be unable to operate through the winter.

Wall Street opened with gains, while US government bond yields eased further, pushing the greenback lower in the American afternoon and helping XAUUSD to recover to positive ground.

Gold price short-term technical outlook

According to the daily chart, the XAUUSD pair has limited bullish potential. The pair keeps trading below the 61.8% retracement of its July/August rally, which favors a test of the lower end of the range at $1,680.82, also the year low. In the mentioned time frame, moving averages head firmly lower, far above the current level, with the 20 SMA converging with the next Fibonacci resistance at $1,744.30. Technical indicators, in the meantime, remain directionless within negative levels, reflecting the absence of buying interest.

The 4-hour chart shows that the bright metal is crossing above a flat 20 SMA while below the longer ones. Technical indicators are advancing around neutral territory, aiming to cross their midlines to positive territory. Bulls may have better chances if XAUUSD recovers beyond the aforementioned Fibonacci retracement, although bears hold the grip at the time being.

Support levels: 1,701.80 1,694.95 1,688.70

Resistance levels: 1,717.90 1,729.25 1,744.30

View Live Chart for XAUUSD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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