Gold price forecast: Upside favored after defense of key support for third straight week


  • Gold is looking north after persistent defense of the 100-week moving average support. 
  • Investors may continue seeking shelter in safe haven assets next week amid escalating US-China trade tensions. 

Gold could rise above $1,300 next week, having defended a long-term moving average price support for the third straight week. 

The safe haven yellow metal found takers at the 100-week moving average (MA) of $1,277 on Monday as Trump’s re-escalation of the trade war with China sent risk assets sharply lower on the fist trading day of the week. 

Last Sunday, Trump said that he would raise tariffs on $200 billion worth of Chinese goods from 10% to 25%, pouring cold water over the optimism generated by Washington’s repeated assurances that talks are progressing well. Gold, therefore, remained bid throughout the week with stocks and other risk assets feeling the pull of gravity on fears of a full-blown US-China trade war. 

However, despite the risk-off, the yellow metal faced rejection at the 50-day MA of $1,291 on Wednesday. Nevertheless, prices are reporting a 0.5% gain on a weekly basis at press time. 

More importantly, Gold’s repeated bounce from the 100-week MA is telling a tale of seller exhaustion. The hard currency has bounced up from the key average this week, as noted earlier. In the previous two weeks, sellers failed to secure a weekly close below the long-term average with prices bouncing up from the support of the trendline connecting August and October lows. 

Weekly chart

As seen above, the sell-off from the February high of $1,346 seems to have run out of steam around the 100-week MA. 

The gains seen this week validate (or mark a strong follow-through to) the rebound from the ascending trendline seen in the previous two weeks. Hence, the metal looks set to breach the upper edge of the falling wedge in the near term.

A wedge breakout would confirm an end of the price pullback and allow a retest of the highs near $1,325 seen in March. The bullish case would weaken if the price closes next week below the ascending trendline. 

That, however, looks unlikely with the 10-year treasury yield looking south toward the 20-week MA support of 2.36%, having carved out a bearish lower high along the six month falling trendline over the last three weeks. 

Further, with the US-China trade deal looking increasingly difficult, the investors will likely continue seeking shelter in gold and other safe haven assets.  The US made good on its threat to raise tariffs earlier today. China has vowed to fight back, but so far, hasn’t disclosed specific of retaliatory measures. Experts believe Beijing will respond by raising the level of its tariffs on existing US goods, rather than target a new list of American exports.

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bearish Oversold Shrinking
1H Bearish Neutral High
4H Bullish Neutral High
1D Bearish Neutral Low
1W Bearish Neutral Low

XAU/USD

Overview
Today last price 1286.2
Today Daily Change 2.10
Today Daily Change % 0.16
Today daily open 1284.1
 
Trends
Daily SMA20 1280.14
Daily SMA50 1291.77
Daily SMA100 1295.42
Daily SMA200 1255.1
Levels
Previous Daily High 1288.16
Previous Daily Low 1279.64
Previous Weekly High 1288
Previous Weekly Low 1266.35
Previous Monthly High 1310.7
Previous Monthly Low 1265.6
Daily Fibonacci 38.2% 1284.91
Daily Fibonacci 61.8% 1282.89
Daily Pivot Point S1 1279.77
Daily Pivot Point S2 1275.44
Daily Pivot Point S3 1271.24
Daily Pivot Point R1 1288.3
Daily Pivot Point R2 1292.5
Daily Pivot Point R3 1296.83

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD trades above 1.18 ahead of US retail sales

EUR/USD is trading above 1.18, off the highs. The dollar advanced along with higher yields, the ongoing fiscal impasse, and upbeat jobless claims. The focus shifts to US retail sales for July. 

EUR/USD News

GBP/USD trades above 1.3050 ahead of more reopening steps

GBP/USD is trading above 1.3050, off the lows. The UK is set to ease some restrictions over the weekend, extending its gradual exit from lockdown. The US dollar is taking a break after gaining and ahead of retail sales. 

GBP/USD News

Gold trades with modest losses, below $1950 level

Gold traded with a mild negative bias through the early European session and was last seen hovering near the lower end of its daily range, around the $1945 region.

Gold News

Forex Today: Three reasons for the greenback comeback, all eyes on retail sales

The US dollar has been gaining ground once again as the bond-yield pendulum swings up again. Washington's fiscal impasse, a weak bond auction, upbeat jobless claims, and Sino-American relations will make way for retail sales figures for July. 

Read more

WTI drops to $42 amid poor Chinese data led risk-aversion

WTI (futures on Nymex) has come under fresh selling pressure and attacks the $42 level, as risk-aversion seeps into the European session and diminishes the demand for the higher-yielding assets such as oil.

Oil News

Forex Majors

Cryptocurrencies

Signatures