Gold Price Forecast: XAU/USD remains on track to test 200-DMA, US GDP awaited


  • Gold price extends three-day uptrend on Thursday, eyes more gains.  
  • Dovish Fed-led weaker yields, DXY help gold price extend beyond $1800.
  • Gold price looks to test 200-DMA ahead of the critical US Q2 GDP.

Gold price found solid support once again near $1792 levels and initiated a strong uptrend on Thursday, reaching as high as $1810 before settling the day around $1807. Gold bulls got that much-needed boost from the Fed monetary policy announcement, which disappointed the hawks big time. The Fed maintained its monetary policy settings in its July meeting, in line with expectations. However, Fed Chair Jerome Powell said that the central bank is in no rush to begin rolling back the bond-buying, as the post-pandemic economic recovery is not there yet. The Fed’s dovish take smashed the Treasury yields and dragged the US dollar lower alongside, benefiting gold price. The precious metal also cheered the optimism around the US infrastructure stimulus deal, with the Wall Street Journal (WSJ) reporting that “negotiators of roughly $1 trillion package are confident they have locked down enough Republican and Democratic support to advance bill later Wednesday.” Meanwhile, the ongoing surge in coronavirus cases globally also continues to bode well for the traditional safe-haven gold.

In the aftermath of the Fed decision, gold price is extending its recent run higher, looking to recapture the critical 200-Daily Moving Average (DMA) at $1821. The market mood has improved amid a rebound in the Chinese stocks, as the People’s Bank of China (PBOC) came to the rescue and calmed the nerves after the recent crash. The recovery in the risk sentiment exerts additional downside pressure on the US dollar, which bears the brunt of the Fed’s dovishness. The weakness in the US rates combined with looming covid concerns also keeps the gold bulls afloat.

Looking forward, the main risk to the gold price rally could come from the US advance Q2 GDP report. The US economy is expected to expand 8.6% in Q2 vs. a 6.4% growth recorded in the previous quarter. Upbeat growth numbers could lift the pressure off the greenback, offering a headwind to gold’s bullish potential.

Gold Price Chart - Technical outlook

Gold: Daily chart

As observed on the daily chart, gold price is approaching the horizontal 200-DMA barrier, as the fundamental factors appear supportive of a move higher.

Acceptance above that level could call for a test of the mildly bearish 50-DMA at $1830.

Meanwhile, the 21-DMA at $1805 guards the immediate downside, below which the 100-DMA at $1800 could be back in play.

Further south, the range lows of $1792 could offer some support to gold bulls.

However, with the 14-day Relative Strength Index (RSI) holding firmer above the midline, the path of least resistance appears to the upside in the near term.

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.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures