Gold Price Forecast: Thursday’s Doji keeps sellers hopeful amid dollar’s rebound

Gold price extends bull-bear tug-of-war into the second straight day.
Global growth concerns support gold while Fed’s tapering bets limit its upside.
Daily technical setup still favors the bears as 200-DMA appears elusive.

Dhwani Mehta FXStreet

Gold price enjoyed good two-way businesses before closing Thursday, modestly flat on the day. Gold price rose as high as $1818, clinching fresh three-week highs amid resurfacing concerns over slowing global economic growth, as Delta covid variant flareups reach Europe. Some of the main Asia-Pac nations are back under covid lockdown restrictions, thanks to the new strain, which threatens the global economic recovery. Safe-haven assets such as gold, Treasuries, the yen and the CHF got a boost amid risk-aversion while a meltdown in the US Treasury yields triggered a sharp decline in the dollar.

However, the ECB’s shift towards a new inflation target combined with rising Fed’s tapering expectations knocked off gold from higher levels, as the metal hit a daily low of $1794. Weak US Jobless Claims data and negative US stocks helped revive the dollar’s safe-haven demand, adding to the retreat on gold price. The yellow metal managed to recapture the $1800 mark into the close.

This Friday, gold price appears to lack a clear directional bias, ranging in Thursday’s trading band near $1800. Although it remains on track to book the third straight weekly advance, as the narrative of slowing economic recovery continues to support. Gold traders remain hopeful that recovery headwinds would compel central banks to maintain a prolonged accommodative monetary policy stance. However, gold’s further upside appears at risk, as the risk-off market profile could likely keep the haven-demand for the US dollar alive, weighing negatively on the USD-denominated bullion. Markets will continue to take cues from the dynamics in the yields and the greenback amid a light US docket. Fresh covid updates and Fed Monetary Policy Report could offer some near-term trading opportunities, as an eventful week draws to an end.

Gold Price Chart - Technical outlook

Gold: Daily chart

The bearish call for gold price remains intact, despite Thursday’s brief advance to three-week highs and the bulls yielding a daily closing above 21-Daily Moving Average (DMA), now at $1796.

As observed on the daily chart, gold price spotted a Doji candlestick a day before, which suggests buyer exhaustion after the recent recovery rally.

A Doji candlestick yet again in Friday’s trading so far also backs the view that the bullish momentum appears to be weakening, as bears fight for control.

Further, the 14-Relative Strength Index (RSI) trades flatlined but still below the midline, adding credence to a potential downside.

To the upside, three-week highs of $1818 will offer strong resistance, above which the slightly softer 200-DMA at $1827 could be challenged.

Alternatively, the 21-DMA will offer immediate support should the downside pressure gain momentum.

The next relevant support is seen at the horizontal 100-DMA at $1790. A daily closing below the latter could open floors towards a retest of the two-month lows at $1751.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.