Gold Price Forecast: Poised to challenge January’s low at 1,782.60
XAU/USD Current price: $1,793.27
- The US economy grew at an annualized pace of 6.9% in the last quarter of 2021.
- Federal Reserve’s hawkish stance boosted demand for the American currency.
- XAU/USD is extremely oversold in the near term, but there are no signs of bearish exhaustion.
Spot gold is sharply down for a second consecutive day, trading around $1,793.00 a troy ounce. The bright metal shed roughly $50 per troy ounce following a hawkish US Federal Reserve monetary policy announcement on Wednesday, as the US central bank hinted at a rate hike in March when the central bank is also set to end its pandemic-related financial support.
The dollar maintains its bullish strength, despite a better market mood, as the US economy grew at an annual pace of 6.9% in the last quarter of 2021 and according to the first estimate. The market was anticipating a 5.5% reading. Other US figures were disappointing, as Durable Goods Orders unexpectedly declined by 0.9% in December, while Pending Homes fell by 3.8% in the same month.
Meanwhile, Wall Street recovered the ground shed post-Fed, with US indexes firmly up. Government bond yields, on the other hand, are slightly lower, with that on the 10-year Treasury note currently around 1.80%.
Gold price short-term technical outlook
The XAU/USD pair is set to fall further, according to the daily chart. The pair is trading around a flat 100 SMA after piercing the 20 and 200 SMAs earlier in the day. Even further, the pair has broken below a daily ascending trend line coming from this month low at 1,782.60, now the immediate support level. Additionally, technical indicators head firmly lower, with the Momentum currently crossing its midline into negative territory and the RSI currently at 42.
In the near term, and according to the 4-hour chart, gold is oversold, but there are no signs of bearish exhaustion. It is currently trading below all of its moving averages, as technical indicators maintain their bearish slopes within extreme levels. Further declines are to be expected on a break below the mentioned January low.
Support levels: 1,782.60 1,773.80, 1,762.60
Resistance levels: 1,803.00 1.816.95 1,825.90
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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.
