Gold Price Forecast: XAU/USD sees a dead cat bounce, $1849 in sight amid covid, election jitters

Gold bulls attempt a bounce but not out of the woods yet.
COVID-19 fears, US election anxiety to keep the US dollar in favor.
September low of $1849 is in sight along with US macro data.

Dhwani Mehta FXStreet

Following a close below the 100-day moving average (DMA), Gold (XAU/USD) extended its declines into the second straight day on Thursday. The bright metal fell to fresh monthly lows of $1860 before recovering some ground to settle the day near $1868. “Sell everything mode” returned to markets in the first half of the day, as the coronavirus fears dominated and bolstered the haven demand for the US dollar across the board. However, the risk sentiment stabilized in the American session after the US GDP data showed a sharp recovery in the third quarter and helped Wall Street rebound. The greenback continued to draw bids and reached monthly highs above 94.00 vs, its main competitors, underpinned by the US fiscal stimulus impasse, election anxiety and dovish ECB.

So far this Friday’s trading, gold is attempting a tepid bounce, as the US dollar bulls take a breather after the solid upsurge. The market mood remains sour amid risk-off action in the Asian stocks and US equity futures, in light of a mixed bag of earnings reports from top-tier US tech companies failed to impress the investors. With the US reporting record 91K new virus infections and tighter restrictions in the EU, the risk-off flows could intensify going forward and revive the haven bids for the greenback. Therefore, the risks remain skewed to the downside for gold, as the metal is on track for the worst week in over a month.

Gold: Short-tern technical outlook

Daily chart

Gold gave a daily closing below the critical 100-DMA, now at $1890, for the second day in a row, convincing investors that the path of least resistance is to the downside.

The 14-day Relative Strength Index (RSI) sees an upturn but remains below the midline, within the bearish region, adding credence to the bearish outlook.

Therefore, the next stop for the bears is seen at $1849, the September month low. Acceptance below the latter could trigger a fresh sell-off towards the horizontal trendline (orange) support at $1791.

Alternatively, recapturing the 100-DMA barrier on a daily closing basis is critical to easing off the selling pressure in the near-term.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.