Gold Price Forecast: Looking to extend its rally beyond September high

Valeria Bednarik FXStreet

XAU/USD Current price: $1,828.85

Inflationary pressures in the US spurred risk-off movements among equities.
Investors are now waiting for the October US Consumer Price Index.
XAU/USD has room to test September high at 1,833.95 and even extend its gains.

Gold approached September high, hitting $1,830.36 a troy ounce with Wall Street opening, holding on to modest intraday gains. The American dollar started the day with a tepid tone but recovered its poise as the US session developed. Persistently high inflation in the country has spurred risk-aversion, with Wall Street trading in the red. However, US government bond yields remain subdued, trading at the lower end of their weekly range.

According to official figures, wholesale prices in the US rose 8.6% YoY in October, unchanged from the previous month, yet still advancing at its highest pace in a decade. The core annual reading was confirmed at 6.8%. Concerns about higher prices were exacerbated by comments from St. Louis Federal Reserve Bank President James Bullard, who said that inflation appears to be broader than is sometimes depicted. On Wednesday, the US will publish the October Consumer Price Index, expected to be confirmed at 5.3% YoY.

Gold price short-term technical outlook

Renewed demand for the dollar is having a limited impact on safe-haven gold. XAU/USD daily chart indicates that bulls retain control, as the bright metal keeps posting higher highs and higher lows. The metal develops above all of its moving averages, with the 20 SMA aiming to cross above the longer ones. Technical indicators have lost their bullish momentum, although there are no signs the rally is over.

The 4-hour chart shows that the risk remains skewed to the upside. The RSI indicator remains steady at 72 without indicating bullish exhaustion, while the Momentum indicator also consolidates within positive levels. Also, the 20 SMA maintains a firmly bullish slope below the current level and above the longer moving averages.

Support levels: 1,819.20 1,810.40 1,798.50

Resistance levels: 1,833.95 1,844.30 1,854.40

View Live Chart for the XAU/USD

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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