Gold Price Forecast: Dollar’s sell-off underpins gold

Valeria Bednarik FXStreet

XAUUSD Current price: $1,841.99

The American dollar changed course despite investors continue escaping riskier assets.
Tepid US data weighs on the greenback but also on Wall Street.
XAUUSD is technically bullish in the near term, immediate resistance at $1,856.35.

Gold price is up to on Thursday, trading above $1,840 a troy ounce after hitting an intraday high of $1,849.18. The dollar changed course after soaring on Wednesday and is in franc decline across the FX board. However, action in stock markets is choppy. European indexes closed in the red, while US ones are mixed, with the DJIA sharply lower but the Nasdaq Composite trading in the green.

Overall, tepid US data has weighed on the American currency, but extreme overbought conditions may have helped to trigger the ongoing decline. One thing is clear: investors are still looking for safety amid the global turmoil. Inflation is the main headache among policymakers as they walk the tightrope to avoid economic slowdown. Tensions between Europe and Russia are for sure not helping to improve the market mood.

Gold Price short-term technical outlook

The daily chart for XAUUSD suggests it could continue recovering, although the outlook remains far from bullish. The bright metal is crossing above a directionless 200 SMA, while it remains below the 20 and 100 SMAs, with the shorter one heading firmly south. Technical indicators, in the meantime, are modestly recovering within negative levels, with limited bullish strength.

The near-term picture is bullish, although the positive momentum has begun fading. The 4-hour chart shows that technical indicators have turned flat within positive levels, consolidating near their daily highs. At the same time, gold is developing above a mildly bullish 20 SMA, while a bearish 100 SMA provides dynamic resistance at around $1,856.35.

Support levels: 1,836.00 1,825.50 1,813.80

Resistance levels: 1,849.20 1,856.35 1,871.50

View Live Chart for the XAU/USD

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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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