Gold Price Forecast: XAU/USD down but not out, a test of $1,900 remains on the cards


  • Gold price eases off five-month tops as China shows signs of stabilization.
  • The US dollar licks its wounds amid weak Consumer Sentiment data.
  • Falling yields to support amid an impending bull cross on the daily sticks.

Gold price refreshed five-month highs at $1,869 on Friday, staging an impressive bounce from as low as $1,845, as the US dollar price action remained the exclusive driver. In the first half of the day, gold price extended its corrective pullback, as the greenback revisited 16-month highs across its main pairs amid mounting worries over rising inflationary pressures. Inflation fears stoked investors’ concerns about global economic growth while boosting the Fed’s rate hike expectations, boding well for the dollar at gold’s expense. In American trading, the tide turned against the US currency after the Michigan Preliminary Consumer Sentiment index dropped to ten-year lows amid persistent inflation risks. The swift retracement in the buck helped gold witness a solid comeback.

Starting out a fresh week, gold price renewed multi-month tops but lacked follow-through upside momentum, now trading modestly lower below $1,860. Gold price is ignoring the extended weakness in the US dollar, as a stabilizing Chinese economy offers some comfort to the market, after reeling from the country’s indebted property sector woes. Investors are also weighing up the Fed’s dilemma amid sapping consumer confidence and surging inflation concerns, as they refrain from placing any fresh bids on gold price. A lack of first-tier US macro news could also keep gold’s trading momentum in check. Traders also bide time ahead of Tuesday’s US Retail Sales release, which will provide fresh cues on the Fed’s rate hike timing.

Gold Price Chart - Technical outlook

Gold: Daily chart

Nothing seems to have changed on the short-term technical front, as gold price remains on track for the further upside on a sustained break above the June 16 highs of $1,869.

The next significant resistance is seen at the June 14 tops of $1,878, followed by the $1,900 psychological level.

The 14-day Relative Strength Index (RSI) peeped briefly in the overbought zone but has eased slightly thereafter, suggesting that a fresh upswing could be in the making.

On the downside, the $1,850 demand area will get tested initially, below which Friday’s low of $1,845 will be the next stop for gold sellers.

The previous critical resistance now support at $1,834 will hold the key for gold bulls.

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD pares weekly losses near 1.1150, German GDP, US inflation eyed

EUR/USD is trading around 1.1150, attempting a bounce from 119-months lows of 1.1132. The US dollar eases from multi-month highs amid a return of risk appetite and firmer Treasury yields. US advance Q4 GDP beat estimates with 6.9% YoY. German Prelim GDP and US PCE inflation awaited.

EUR/USD News

GBP/USD regains 1.3400 on Brexit optimism ahead of Sue Gray report, US PCE Inflation

GBP/USD bounces off five-week low amid a sluggish Asian session. UK Foreign Secretary Liz Truss eyes significant progress in Brexit talks by February, Dover queues, DUP portray pessimism. Report over UK PM Johnson’s future leadership remains delayed with more negative details getting added of late.

GBP/USD News

Gold rebounds ahead of US PCE inflation, not out of the woods yet Premium

Gold price attempts a bounce as the US dollar retreats ahead of US PCE inflation. After Wednesday’s $40 sell-off, gold price tumbled another $23 on Thursday, as bulls finally surrendered the $1,800 area to hit the lowest level in two weeks at $1,792. 

Gold News

Why Bitcoin has entered a new bear market

Bitcoin price has tumbled to a multi-month low below $33,000, as the leading cryptocurrency loses 50% of its value from its all-time high in November 2021. This marks the second-worst sell-off since the bear market that spanned from 2018 to 2020. 

Read more

US PCE Inflation Preview: Dollar rally has more legs to run Premium

Annual Core PCE inflation is forecast to rise to 4.8% in December from 4.7%. US Dollar Index surged to its highest level in more than a year on Fed's hawkish outlook.  Dollar is likely to continue to outperform its rivals in the near term.

Read more

Majors

Cryptocurrencies

Signatures