Gold Price Forecast: Bulls need a break above $1,520

Gold is set to end the week with moderate gains, but a bullish revival remains elusive with prices still trapped in a range of $1,520 and $1,475.

The yellow metal is currently trading at $1,507 per Oz, representing a 0.22 % gain on Monday's opening price of $1,504.

Gold began the week on a negative note by falling 0.80% on Monday. The decline validated Friday's Gravestone Doji candle and shifted risk in favor of a deeper drop to the 100-day moving average, then lined up at $1,465.

The descent, however, was cut short on Wednesday near $1,481 even though the US Federal Reserve (Fed) delivered a hawkish rate cut. The central bank reduced rates by 25 basis points as expected, but indicated a pause in rate cuts by removing a key clause that had appeared in post-meeting statements since June saying "it was committed to acting as appropriate to sustain the expansion", according to CNBC.

Gold managed to eke out modest gains on Wednesday and closed above $1,500 on Thursday, confirming an upside break of a two-month descending channel.

Thursday's gains were likely fueled by China's official Manufacturing PMI, which showed the factory activity shrank for a sixth straight month in October and growth in the service sector fell to lowest since February 2016.

So far, however, the channel breakout has failed to draw bids. This is evident from the fact that Gold is currently reporting a 0.30% drop on the day.

Fed's pause reinforced

The US Nonfarm Payrolls data released at 12:30 GMT on Friday showed the economy added 128,000 jobs, even with the negative drag of 46,000 striking GM workers and the reduction of 17,000 federal government jobs. Economists had expected payrolls to come in at 75,000.

Further, Payrolls for August and September were revised higher by 95,000 jobs.

An above-forecast October data coupled with the solid upward revision to August and September figures showed that the labor market is still hot and the Fed is right in signalling a rate pause.

Gold, therefore, could have a tough time capitalizing on the falling channel breakout during the next week.

The resistance at $1,520, however, will likely be scaled if the US-China trade optimism fades and the US ISM non-manufacturing data, due at 15:00 GMT, prints well below estimates, sending the US Treasuries and the US Dollar lower.

Technical Outlook

Gold's daily chart shows a falling channel breakout. Even so, the outlook remains neutral as the metal is still trapped in a $1,520 to $1,474 range.

A daily close above $1,520 would revive the bullish bias and open the doors for $1,536 (Sept. 24 high). A violation there would expose the high of $1,557 reached on Sept. 4.

A breakout above $1,520 could happen next week, as the MACD histogram has crossed above zero, confirming a bullish reversal. Further, the 14-day relative strength index has breached the descending trendline falling from June highs.

What's more, the Dollar Index, Gold's biggest nemesis, is looking south, having charted a bearish lower high of 98.00 earlier this week.

Daily chart

Gold Forecast Poll

The Forex Forecast Poll is a sentiment tool that highlights near- and medium-term price expectations from leading market experts. Currently, a majority of analysts are expecting Gold to trade in the red. The short-term bearish forecast may come as a surprise to those who are betting on biggins, courtesy of the falling channel breakout on the daily chart. Meanwhile, the outlook for one month and one quarter is bullish.

The US Federal Reserve Rate cut caused a surge, which broken the channel down pattern, which guided the pair since the start of September. In general, the metal is expected to trade between psychological levels like the 1,500.00, 1,540.00 and 1,560.00 levels.