Gold Price Forecast: Will XAU/USD sustain above $1750? Focus on Fedspeak, US data

  • Gold price recaptures $1750 but bulls still appear cautious in the ISM week.
  • Risk appetite improves as Evergrande fears ebb, US stimulus optimism resurfaces.
  • Technical setup on the 4H chart casts doubt on the bullish potential, central bankers’ speeches eyed.

Gold price rebounded from near six-week lows on Friday, helped by the persistent uncertainty over China Evergrande debt issue after the company’s failure to notify on the offshore coupon repayment kept investors on the edge. The flat to negative close on global stock markets added to the risk-aversion and lifted gold’s safe-haven appeal. However, the hawkish Fed-led rally in the US dollar alongside the Treasury yields kept the rebound limited in gold price. The Bank of England (BOE) also hinted at a sooner-than-expected rate hike last week, checking gold’s recovery gains.

Starting out a fresh week on Monday, gold is holding the higher ground above $1750, extending the previous rebound amid a broadly weaker US dollar, as the Treasury yields retreat from multi-month tops. But gold bulls remain cautious amid improving market mood, as China Evergrande fears recede, with the optimism around the US infrastructure stimulus vote on Thursday, dominating. Gold traders refrain from placing fresh long bets on the metal ahead of the critical US Durable Goods data and a slew of central bankers’ speeches due later in the day. The ECB President Christine Lagarde is scheduled for an appearance, followed by the Fedspeak and BOE Governor Andrew Bailey’s speech.

Meanwhile, Tuesday’s testimony by Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen will be eagerly awaited ahead of the all-important US ISM Manufacturing numbers dropping in on Friday.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

As observed on the four-hour chart, the bearish 21-Simple Moving Average (SMA) at $1760 is challenging the renewed upside.

If gold bulls succeed to find a strong foothold above the latter, then the downward-sloping 50-SMA at $1765 could be immediately probed.

A fresh upswing will be initiated on a four-hourly candlestick closing above the 50-SMA, opening doors towards the descending 100-SMA at $1783.  

The Relative Strength Index (RSI) sits slightly beneath the midline, warranting caution for gold buyers.

Rejection at the 21-SMA hurdle could recall the sellers, targeting the $1750 psychological level initially.

The next downside target will be then aligned at six-week troughs of $1738, below which the falling trendline support at $1735 would be put to test.

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