Gold Price Forecast: XAU/USD extends slump to the $1,850 region

Valeria Bednarik FXStreet

XAU/USD Current price: $1,863.35

The United States confirmed the Q2 Gross Domestic Product at 2.1%.
US government bond yields retreated further from the multi-year highs posted last week.
XAU/USD reaches extreme oversold conditions in the near term giving no signs of exhaustion.

Gold price extended its decline on Thursday to $1,857.66 a troy ounce, its lowest since early March. The US Dollar lost ground against most major rivals but surged vs the bright metal as the market mood slightly improved. European and American indexes traded with a better tone, helped by encouraging United States macroeconomic data. The country released the final estimate of the Q2 Gross Domestic Product (GDP), which was confirmed at 2.1%. Additionally, Initial Jobless Claims for the week ended September 22 printed at 204K, better than the 215K anticipated.

Meanwhile, government bond yields retreated further from record highs. The 10-year Treasury note currently yields 4.61%, while the 2-year bond offers 5.08%, down 12 basis points (bps) from the multi-year high posted after the latest Federal Reserve (Fed) monetary policy announcement.

Market players are now waiting for the latest US inflation update. The country will publish the August Personal Consumption Expenditures (PCE) Price Index on Friday, and the core annual reading is foreseen at 3.9%, actually below the July reading of 4.2%.

XAU/USD short-term technical outlook

From a technical perspective, the daily chart shows XAU/USD is sharply down for a fourth consecutive day, with no signs of downward exhaustion. Technical indicators maintain their bearish slopes, with the Relative Strength Index (RSI) indicator heading south at around 27. At the same time, XAU/USD develops over $50.00 below a bearish 20 Simple Moving Average, which accelerates its slide below the longer ones.

In the near term, and according to the 4-hour chart, XAU/USD is extremely oversold, yet technical indicators keep heading south almost vertically and near their intraday lows, suggesting selling interest is still quite strong. Meanwhile, the 20 SMA accelerated its slide and currently provides dynamic resistance at around $1,895, while the longer ones slowly grind lower in the $1,910 region.

Support levels: 1,858.30 1,845.20 1,832.65

Resistance levels: 1,871.50 1,884.70 1,895.00

View Live Chart for XAU/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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