Gold Price Forecast: XAU/USD bears to dominate along with coronavirus fears

Gold (XAU/USD) once again witnessed a good two-way price action on Wednesday but remained trapped in the $20 range, well below $1900. During the first half of the day, the yellow metal fell as low as $1864 after Pfizer and BioNtech came out with reports that the covid vaccine has shown 95% efficacy in its third phase final trial. However, the excitement was soon doused by the fresh coronavirus statistics from the US, revealing that the new infections and hospitalizations continue to surge. Amid the covid growth, new shutdowns and restrictive measures were announced in the US cities. Wall Street indices turned south and lifted the haven demand for the greenback, which kept the bearish pressure intact on the gold. However, the fall in the US Treasury yields, in the face of the economic growth concerns, offered temporary reprieve to the gold bulls before the price slipped back below $1870 into the closing.

Looking ahead, gold remains exposed to downside risks, as the risk-aversion on the global markets could deepen and revive the dollar’s recovery momentum, as investors take note of the new shutdowns worldwide and its likely impact on the global economic recovery. Also, the vaccine optimism seemingly faded, as its dissemination is seen unlikely before Spring 2021. The US docket highlights the Philly Fed Manufacturing Index, although the covid data will likely hog the limelight.

Gold: Short-term technical outlook

Hourly chart

As observed in the hourly chart, gold has confirmed a rising channel breakdown on the hourly chart and looks to extend the downside, as the price trades below all the major hourly moving averages (HMA).

The hourly Relative Strength Index (RSI) holds in the bearish region but above the oversold territory, suggesting that there is more room to the downside.

Therefore, a test of the measured target $1822 cannot be ruled out in the coming days should the bulls fail to defend the crucial $1850/49 support area. That level is the confluence of the September month low and November 9 low.

On the flip side, recapturing the $1873 barrier, the intersection of the bearish 21-HMA and the pattern support now resistance, is critical for the recovery to gain traction.

Further up, strong resistance awaits at $1884, which is the convergence of the 100 and 200-HMAs.