Gold Price Forecast: XAU/USD eyes $1840, overbought conditions, NFP could play spoilsports


  • Gold holds onto recent advance above $1800, 3-month tops.
  • Eyes $1840 after the technical breakout on the 4H chart.
  • Overbought RSI conditions caution bulls ahead of the key NFP data.

Gold (XAU/USD) put up a solid show and outperformed on Thursday, rising over 1% to hit the highest levels in three months at $1818. The price of gold finally raced past the $1800 psychological level, thanks to the persistent weakness in the US dollar and the Treasury yields on dovish Fed expectations. Despite rising inflation expectations, the Fed is likely to remain committed to its accommodative policy stance until a ‘substantial progress’ is witnessed in the labor market. The recent Fedspeak also pushed back tapering bets, lifting stocks and gold at the dollar’s expense. Gold bulls ignored upbeat US Initial Jobless and signs of strengthening economic recovery, as prospects of higher inflation continue to underpin the inflation-hedge, gold.

The price of gold is extending the recent upsurge, sitting at a new 11-month top at $1822, as the bulls take a breather, in anticipation of the all-important US NFP report. The US economy is seen adding 978K jobs in April vs. 916K reported previously. A big NFP blowout is needed to revive the Fed’s tapering talks, which could likely trigger a sharp correction in gold. However, disappointing figures would back the central bank’s dovish approach, fuelling further upside in gold. In the meantime, the broader market sentiment and the greenback’s price action will be closely followed.

Gold Price Chart - Technical outlook

Gold: Four-hourly chart

Gold’s four-hourly chart shows that the price extended the upside break from the rounding bottom formation.

The next barrier awaits at the $1830 round figure, above which the pattern target measured at $1840 could be tested.

However, with the Relative Strength Index (RSI) holding in the overbought region, a pullback towards Thursday’s close of $1815 cannot be ruled.

Further south, the $1800 mark could protect the downside. The pattern neckline resistance now support at $1798 will be the level to beat for the gold bears.

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

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD tumbles below 1.17 as Fed sets clear taper timeline

EUR/USD has reversed course, plunging under 1.17 after the Fed signaled tapering of bond buys as soon as November, and the conclusion of the process in mid-2022. The hawkish surprise means a rate hike could come sooner. 

EUR/USD News

GBP/USD pares gains on Fed's hawkish shift

GBP/USD is trading under 1.3650, falling as the Fed signaled tapering could begin shortly and end in mid-2022. The prospects of US rate hike are boosting the dollar across the board. 

GBP/USD News

Gold: Fed's hawkish tone marred by risk-on sentiment

Fed leaves interest rates unchanged says moderation in asset purchases "may soon be warranted". Gold volatile on the FOMC statement and rallies into daily resistance. Risk-on tone persists surrounding Evergrande contagion prospects abating. 

Gold News

XRP price bound for another dip before 40% rebound

Ripple price came down 20% since the beginning of this week. With some upside today, bulls stand to face a bull trap that could get quite painful. A better entry point at $0.78 looks to be more promising for bulls.

Read more

Powell Quick Analysis: Three hawkish points propel dollar, NFP critical to cement tapering

Powell surprised by signaling taper announcement could come in November. Tapering may end by mid-2022, opening the door to earlier rate hikes. Powell's comment on employment goal "all but met" is a significant hawkish shift. 

Read more

Majors

Cryptocurrencies

Signatures