|

Gold Price Forecast: Bearish technical structure suggests more pain ahead

  • Gold Price smashed amid the upsurge in the Treasury yields, the US dollar.
  • Recession fears return, spooking global markets and boosting the USD.
  • XAU/USD challenges bullish commitments below 200-DMA once again.  

Amidst two-way business witnessed at the start of the week on Monday, Gold Price suffered heavily, extending its retreat from three-week highs of $1,874. The sell-off in the metal saw the price hitting the lowest level in three days at $1,842, where the critical horizontal 200-Daily Moving Average (DMA) aligns. Fundamentally, the bright metal traded on the front foot in the first half of the day, as bulls looked to recoup Friday’s upbeat US NFP-led losses. The dollar retreated across the board in tandem with the Treasury yields, as investors cheered the covid easing optimism and a slowing pace of services sector contraction in the world’s second-largest economy – China. Risk flows returned and curbed the haven demand for the buck.

The rebound in XAUUSD soon vapored out, as concerns over the Fed’s aggressive monetary policy rekindled recessionary fears and revived the demand for the US dollar as a safe haven. The US yields rebounded firmly in American trading, with the benchmark 10-year rates surpassing the critical 3% level. The bright metal came under renewed selling pressure and dropped below the $1,850 level once again. The firmer yields-driven decline in the Wall Street stocks failed to offer any relief to XAU bulls.

Gold Price is licking its wounds near the $1,840 region in the Asian session this Tuesday, as the dollar is sitting close to the monthly top amid a cautious market mood. The US yields have entered an upside consolidative mode, as gold sellers catch a breather. The greenback remains at the mercy of the broader market sentiment and the dynamics of the yields, in absence of any relevant US economic data due later in the day.

Full markets will return, bringing in some volatility, which could exacerbate the downside in the metal. The buck may continue to benefit from the renewed upsurge in the USD/JPY pair, as the yen sets a fresh 10-year low.

Gold Price Chart: Daily chart

As observed on the daily chart, the bearish 50-Daily Moving Average (DMA) crossed the horizontal 100-DMA for the downside on Monday, confirming a bear cross, as the selling interest revived in the metal.

Bears breached the $1842 key support, the confluence of the bearish 21-DMA and horizontal 200-DMA.

Traders are now poised for a fresh downswing in XAUUSD once the 21 and 200-DMA bearish crossover gets validated on the said timeframe.

A a test of the previous week’s low of $1,829 remains well on the table should the bearish pressures intensify.  Further south, the $1,820 round figure will come to the rescue of gold bulls.

The 14-day Relative Strength Index (RSI) remains below the midline, suggesting that the downside remains more compelling in the near term.

On the flip side, any recovery will need acceptance above the aforesaid strong support now turned resistance at $1,842.

The next upside target could be the $1,850 psychological barrier, above which Monday’s high of $1,858 could be challenged.

Buyers will seek fresh opportunities above the latter to initiate a fresh upswing towards the previous week’s high of $1,870.

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

More from Dhwani Mehta
Share:

Editor's Picks

GBP/USD drops to multi-week lows below 1.3300

GBP/USD sets aside Friday’s uptick and breaches below the 1.3300 yardstcik on Monday to hit new multi-week troughs. Falling crude oil prices following a pause in the Middle East conflict in combination with the recent soft reading in UK inflation appear to play against any BoE tightening ahead of the bank’s event later in the week.

EUR/USD meets support near 1.1370

EUR/USD fades the initial bull run past 1.1400 the figure, deflating toward the 1.1370 zone on Monday. That said, the pair reverses two daily drops in a row on the back of the irresolute price action in the US Dollar, at the time when investors continue to closely follow developments from the Middle East conflict. Next on tap is the release of the US Consumer Confidence gauge by the Conference Board.

Gold struggles to extend gains beyond $4,100
Spot Gold gapped higher at the beginning of the new week, as a pause in Middle East hostilities underpinned the mood and weighed on the US Dollar (USD). The XAU/USD pair traded as high as $4,116.20 during Asian trading hours, following a pause in strikes between Iran and the United States (US).
Bitcoin vs Gold: BTC and Gold struggle to gain momentum despite US-Iran truce
Market participants are changing gears on Monday from the war between the United States (US) and Iran in the Middle East to the anticipated Federal Reserve (Fed) interest rate decision. Meanwhile, Bitcoin (BTC) and Gold (XAU) are losing momentum, with BTC slipping below the pivotal $65,000 level while XAU remains sideways in the $4,000-$4,100 range.
Pause in military action fails to inspire market rally
More tech volatility has outweighed the impact of the pause in US-Iran fighting, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG. When a calming of Middle Eastern hostilities fails to provoke a major up day in stocks, you know there is more trouble ahead.
US Dollar mid-year outlook: Exceptional currency, exceptional risks?
The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.