Gold Price Forecast: Eyes 8-month rising trendline after weakest weekly close since December

Gold has suffered its weakest weekly close in four months and appears on track to test the ascending trendline from August 2018 lows over the next week or two.

The yellow metal has ended this week at $1,275, the lowest weekly close since December, representing a 1.16 percent drop. Prices hit a low of $1,271 earlier this week.

The sell-off seems to have been triggered by the strength in the US dollar, gold’s biggest nemesis.

The dollar index, which tracks the value of the greenback against majors, is on track to end the week with 0.57 percent gains and could remain bid next week, as the data released yesterday showed the consumer spending ticked higher in March and will likely remain solid in the near future with jobless claims hitting 50-year low.

As a result, the path of least resistance for the safe haven yellow metal appears to be on the downside. Validating that argument is the weekly chart, which indicates scope for a slide to key rising trendline support.

Weekly chart

The big red weekly candle reinforces the bearish view put forward by the previous week’s gravestone doji.

Add to that, the triangle breakdown and the descending 5- and 10-week moving averages (MAs) and the metal looks set to test the support of the trendline connecting August and November lows, currently at $1,258. That support is seen rising to $1,261 next week.

The slide to eight-month rising trendline support, however, could be preceded by a minor bounce, as the relative strength index (RSI) on both the 4-hour and hourly charts has diverged in favor of the bulls.

Prices, therefore, could revisit the former support-turned-resistance zone of $1,280-$1,285, before sliding to $1,260 as called by the weekly chart.

Acceptance above the resistance zone of $1,280-$1,285 would weaken the bearish case. A move above that hurdle could happen if the risk-on grips markets.

Improved risk appetite is usually bad news for safe havens like gold. Markets, however, have been treating the greenback as a safe haven for almost 12 months now.

Hence, improved risk appetite and the resulting dollar weakness could bode well for the yellow metal. That said, if the risk-on pushes the dollar higher, then a deeper drop in gold could be seen, as suggested by the weekly chart.

Apart from the broader market sentiment, the focus would also be on the US data, particularly the monthly US durable goods orders report, due next Thursday.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD capped under 1.13 as Lagarde hints at inaction

EUR/USD is trading below 1.13, steady. ECB President Lagarde hinted she will pause in next week's decision while urging leaders to agree on fiscal stimulus. US coronavirus data and Sino-American relations are eyed.


Breaking: Gold breaks above $1,800, new mutli-year high, next levels eyed

Gold is trading above $1,800, highest since 2012.

Read more

GBP/USD holds up around 1.2550 ahead of Sunak's speech

GBP/USD is trading around 1.2550, holding onto its gains. UK Chancellor Sunak is set to lay out the fiscal stimulus plan. Brexit remains deadlocked as PM Johnson told German Chancellor Merkel that Britain could leave without a deal.


Forex Today: Gold eyeing $1,800, dollar mixed, as coronavirus, Hong Kong peg move markets

Markets are looking for a new direction after stocks retreated and the dollar gained some ground on Tuesday. Concerns about coronavirus cases in the US and geopolitical tensions are in play.

Read more

WTI looks for a firm direction below $41.00, EIA inventories eyed

WTI recedes from intraday top while also keeping the bounce off daily low near $40.30. Global pressure on China, coronavirus resurgence keeps a lid on the blackgold. European oil giant follows BP and Shell to cut price forecast. EIA Crude Oil Stocks expected to drop 3.4M versus prior fall of 7.195M.

Oil News

Forex Majors