Gold Price Forecast: XAU/USD set to test 200-DMA amid US dollar’s dead cat bounce


  • Gold eyes additional upside as the US dollar bounce fades on NFP miss.
  • Treasury yields fail to extend the recovery as dovish Fed bets weigh.
  • RSI remains bullish, a test of 200-DMA likely on the cards.

Gold (XAU/USD) registered the best week in six months after it shot to a new three-month high of $1843 on a terrible US jobs report. The headline NFP rose by just 266K vs. expectations of a 978K increase. Disappointing NFP data bolstered expectations that the Fed will remain committed to its accommodative monetary policy stance, which hammered the US Treasury yields in tandem with the dollar and lifted bullion’s appeal. However, the risk-on rally in Wall Street helped the US rates to recover ground towards the weekly closing, capping the upside in the price of gold.

Gold is on a corrective mode this Monday, but holds onto the recent gains above $1830, with the upside in check (for now) amid the US dollar’s dead cat bounce. The upbeat market mood amid vaccine optimism is underpinning the recovery in the Treasury yields, which saves the day for the dollar bulls, Although the greenback’s pullback appears shallow amid a risk-friendly market environment and dovish Fed expectations. Gold traders are taking a breather before resuming the uptrend. In absence of significant economic data from the US, gold prices will continue to remain at the mercy of the dollar and yields.

Gold Price Chart - Technical outlook

Gold: Daily chart

Gold’s daily chart depicts that the odds remain in favor of the bulls, as they keep their sight on the 200-daily moving average (DMA) at $1851.

Ahead of that the gold price needs to take out Friday’s high of $1843.

Only a daily closing above the 200-DMA could call for a retest of the $1900 psychological barrier.

The Relative Strength Index (RSI) lies just beneath the overbought region, currently at 68.44, pointing to additional upside potential.

However, if the correction regains momentum, gold prices could fall back towards Friday’s low of $1813.

The $1800 threshold could emerge as strong support for the XAU buyers.

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

EUR/USD consolidates weekly gains above 1.1150

EUR/USD consolidates weekly gains above 1.1150

EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.

EUR/USD News
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains. 

GBP/USD News
Gold extends rally to new record-high above $2,610

Gold extends rally to new record-high above $2,610

Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.

Gold News
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap

Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap

SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.

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