Gold Price Forecast: XAU/USD looks to $1750 amid coronavirus vaccine-driven optimism

Economic optimism by vaccine progress hurts gold’s safe-haven allure.
Gold’s 1H chart points to more pain but a bounce cannot be ruled out.
Gold remains a good selling opportunity on recovery attempts.

Dhwani Mehta FXStreet

Gold (XAU/USD) remains exposed to further downside risks heading into the critical NFP week this Monday, especially after the metal breached the $1800 threshold and closed the week below that level. Gold eroded 4.5% over the week while on track to book the worst month in four months. The spot has lost over $300 since it reached record highs of $2075 in August.

Early Monday, gold witnessed a fresh 15-pips drop and renewed four-month troughs at $1765, as the sell-off resumed amid ongoing optimism surrounding the coronavirus vaccine optimism, suggesting a swifter global economic rebound next year. The economic optimism dulls gold’s safe-haven allure. Further, US banking giants – Citi and Goldman Sachs lowered their gold-price forecasts for 2021, which also collaborates with the weakness in the metal.

In the day ahead, gold could take cues from the second-tier US Pending Homes Sales data and sentiment on Wall Street.

Gold Price Chart - Technical outlook

Hourly chart

The hourly chart shows that gold could attempt a rebound from multi-month lows, as the Relative Strength Index (RSI) is heavily oversold at 25.46. The confluence of the daily high and bearish 21-hourly moving average (HMA) at $1790 could limit the bounce.

Overall, the risks remain skewed to the downside, as the price has breached the week-long descending trendline support at $1771. The next relevant downside target is seen at $1758, the July 2 high. The $1750 psychological level will be the level to beat for the bears.

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.

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