Gold Price Forecast: XAU/USD cheers coronavirus curbs, tepid US dollar ahead of Powell
- Gold benefits from risk-off mood, US dollar weakness.
- $1963 is the level to beat for the XAU/USD bulls.
- Coronavirus updates and Fed Chair Powell’s speech eyed.
Having closed the week just above the critical $1950 barrier on Friday, Gold (XAU/USD) buyers remain motivated in Monday’s trading so far. The yellow metal draws bids from broad-based US dollar weakness and the downbeat market mood. The sentiment remains sour amid resurgent coronavirus fears, especially after the UK is considering nationwide lockdown while Greece and Denmark announced new restrictions on Friday. Investors seek safety in gold, as they fear the fresh measures to contain the virus resurgence could temper the nascent global economic recovery. Meanwhile, the US dollar remains on the back foot, despite the risk-aversion, as the overhang over the US fiscal impasse combined with growing election risks continues to weigh.
The negative tone in the US equity futures points to a weak start on Wall Street, which could bode well for the bright metal. The focus also remains on the speech by the US Federal Reserve (Fed) Chairman Jerome Powell due later on Monday at 1400 GMT. Any hints on the Fed’s future monetary policy path will have a significant bearing on the dollar-denominated gold.
Gold: Short-tern technical outlook
Hourly chart
As overserved in the hourly chart, Gold has pierced above the 21-day Simple Moving Average (DMA), now at $1952.23, in a bid to test the horizontal 100-HMA at $1955. The 14-day Relative Strength Index (RSI), currently at 55.44, points higher, indicative of more upside.
Therefore, a break above the 100-HMA hurdle, the price could see a fresh uptick towards the rising channel trendline resistance at $1963.11. Only a sustained break above the latter could open doors towards the last week’s high of $1973.64.
Should the bulls face rejection at the aforesaid barrier, the price could fall back towards the 100-HMA. Further down, sellers will aim for the 200-HMA at $1949.75 if the 21-HMA resistance-turned-support gives way. Steeper declines cannot be ruled, as the bears would regain control below a break of the $1940 level.
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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.
