Gold Price Forecast: Firmer bearish case once below 1,756.60

Valeria Bednarik FXStreet

XAU/USD Current price: $1,789.91

US Federal Reserve set to tapper, but what about rate hikes?
Wall Street retreats from record highs, while US Treasury yields ticked higher.
XAU/USD broke lower and is currently near a critical Fibonacci support level.

Gold plummeted to $1,758.81, its lowest since October 13, now treading water in the 1,760 pare ahead of the US Federal Reserve’s announcement on monetary policy. The greenback trades with a firmer tone across financial markets, as Wall Street retreats from record highs and US government bond yields tick higher.

The US central bank is expected to announce the reduction of its pandemic-related financial support, by trimming the monthly amount of assets buying by $15 billion. Such a decision has already been priced in and could spur limited action in prices. The main focus will be on whether the mentioned figure is correct, and the future or rate hikes. Chief Jerome Powell has repeated multiple times that retrieving QE does not mean a rate hike, but the market will price in sooner hikes anyway. Any hint on the matter should boost the greenback.

Gold price short-term technical outlook

Ahead of the event, the XAU/USD pair trades near the mentioned low and has broken several support levels without looking back, and it is nearing the 61.8% retracement of its latest daily advance at 1,756.60, the immediate support level. Once below the latter, the metal is set to keep falling toward the 1,700 area, particularly with US positive surprises.

The bright metal is bearish, according to the daily chart, as it has collapsed below all of its moving averages, while technical indicators head firmly south within negative levels. The near-term picture is also bearish, as the price has broken below a flat 200 SMA, while the 20 SMA is crossing below the 100 SMA, both far above the current level. At the same time, technical indicators maintain their bearish slope, despite being at oversold levels.

Support levels: 1,756.60 1,745.20 1,733.10

Resistance levels: 1,767.40 1,778.60 1,800.60

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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