Gold price forecast: Lower high formed at former support-turned-hurdle

Gold risks falling to fresh 4.5-month lows, having charted a bearish lower high along the former support-turned-resistance.

The yellow metal is currently trading at $1,273 per Oz, representing a 0.28% gain on the day.

Prices fell sharply in 13 days to April 23 to hit a low of $1,266, as the American Dollar was better bid back then with upbeat macro data releases pointing to a better-than-expected first quarter economic performance.

The GDP number did print well above estimates, however, the details of the report showed that inventories bumped up the growth rate, while consumer spending, the main engine of the US economy, slowed.

As a result, markets offered the greenback following the release of the US GDP last Friday, helping the safe-haven metal regain some poise. The metal jumped 0.69% to a high of $1,288 and looked set to test $1,300 this week.

The bounce, however, has been cut short by the former support-turned-resistance of $1,286 (head-and-shoulders neckline). The failure to beat the key resistance could be associated with the post-Fed rise in the US Dollar. On Wednesday, Fed's Powell pushed back rate cut expectations by associating low inflation with transitory factors. Powell added further that there is no strong case for a rate move in either direction.

Daily chart

As can be seen, gold has charted a third bearish lower high along the head-and-shoulders neckline, reinforcing the bearish view put forward by the downside break of the neckline support on April 16.

The relative strength index (RSI) is reporting bearish conditions with a below-50 print.

Further, the chart also shows an impending bearish crossover of the 50- and 100-day moving averages (MAs). The 20- and 30-day MAs are also trending south, indicating a bearish setup. As a result, a drop to the 200-day MA, currently at $1,252, could be seen in the next 24 hours or so.