Gold Price Forecast: Corrective pullbacks to be good buying opportunity

Gold’s corrective declines likely to be bought in.
Lower yields and dollar weakness to remain supportive.
US ADP jobs, ISM Services PMI and stimulus talks in focus.

Dhwani Mehta FXStreet

Gold (XAU/USD) broke through the $2000 threshold for the first time on record on Tuesday and settled around $2020, staging a massive $50 rally. There were two key catalysts behind the upsurge in the yellow metal, first being the persistent weakness in the US dollar, as the US Treasury yields (real and nominal) sit at record lows. The deadly explosion in Beirut further boosted gold’s haven demand. Falling bond yields remain reflective of the worsening US economic picture amid the continued rise in the coronavirus cases and the ongoing US Congress stalemate over the virus relief package.

Gold scaled a new record high of $2031.20 in early Wednesday, building on the previous rally, taking cues from the risk-off tone in the Asian equities. Markets continue to weigh the risks of a stimulus deadlock. Although, a quick retracement knocked-off the bright metal to near $2010 region after fresh reports on the vaccine prompted a mild recovery in the risk sentiment. Despite the corrective slide in the metal, the prospects remain constructive ahead of the US ADP jobs, ISM Non-Manufacturing PMI and stimulus talks.

Short-term technical outlook

Gold: XAU/USD Hourly chart

The hourly chart throws a near-term view on the precious metal, suggesting that buy the dips trading could be well in play, as long as the price holds above the bullish 21-hourly Simple Moving Average (HMA), now placed at $2002.

The hourly Relative Strength Index (RSI) has once again turned north and flirting with the entrance of the overbought territory, backing the case for dip-buying.

The record highs could be retested if the buyers regain control en route the critical $2050 psychological level.

A break below the 21-HMA support could call for a drop towards the next support of the upward-sloping 50-HMA at $1985.35.

Gold: Additional levels to consider

XAU/USD

Overview
Today last price	2015.58
Today Daily Change	-4.40
Today Daily Change %	-0.22
Today daily open	2019.98

Trends
Daily SMA20	1878.23
Daily SMA50	1796.36
Daily SMA100	1733.84
Daily SMA200	1634.69

Levels
Previous Daily High	2020.02
Previous Daily Low	1967.68
Previous Weekly High	1984.8
Previous Weekly Low	1900
Previous Monthly High	1984.8
Previous Monthly Low	1757.7
Daily Fibonacci 38.2%	2000.03
Daily Fibonacci 61.8%	1987.67
Daily Pivot Point S1	1985.1
Daily Pivot Point S2	1950.22
Daily Pivot Point S3	1932.76
Daily Pivot Point R1	2037.44
Daily Pivot Point R2	2054.9
Daily Pivot Point R3	2089.78

Author

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.

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