Gold Price Forecast: XAU/USD downed by US dollar comeback after Presidential election debate
- Gold sold-off after facing rejection once again at $1900 mark.
- US election debate fuels risk-aversion, saves the day for USD bulls.
- Bears await the US ADP jobs, GDP and sentiment on Wall Street.
Gold (XAU/USD) extended its recovery rally from two-month lows on Tuesday, only to face rejection at $1900 but settled near daily highs. The main catalyst behind gold’s rise was the extended corrective declines in the US dollar from two-month highs amid cautious optimism. Expectations over a likely US coronavirus relief bill and solid Chinese economic data buoyed the sentiment, although investors remained cautious amid the coronavirus resurgence and ahead of the first US Presidential election debate.
In Wednesday’s trading so far, the yellow metal turned south after failing to regain the $1900 barrier once again. The $10 drop in gold was fuelled by a broad-based US dollar comeback after election debate wrapped up. The debate was largely unimpressive, although US President Donald Trump’s warning on the election outcome delay knocked down the risk sentiment and refueled the US dollar’s demand as a safe-haven. Further, the sell-off could be also chart-driven. It remains to be seen if the dollar sustains the bounce ahead of the US ADP and GDP data while the sentiment on Wall Street will also play a key role in gold’s price movement.
Gold: Short-tern technical outlook
Hourly chart
As observed in the hourly chart, gold has confirmed a rising wedge breakdown following an hourly closing below the pattern support at $1892.55.
The rejection from the $1900 mark has prompted the bears to take out the 21 and 200-hourly Simple Moving Averages (HMA) support levels, with the upward-sloping 50-HMA support at $1881 next in sight.
The hourly Relative Strength Index (RSI) has turned flat while at the midline, suggesting a tepid pull back from the daily lows. However, recapturing the 200-HMA at $1894 on a sustained basis could only revive the upside momentum towards $1900 and above.
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
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.
