Gold Price Forecast: XAU/USD torn between vaccine woes and dollar strength, awaits a clear direction

Gold wavers within familiar ranges after Tuesday’s volatility.
Vaccine concerns appear to offset broad dollar strength.
Awaits a range breakout, as the focus shifts to the ECB decision.

Dhwani Mehta FXStreet

Gold (XAU/USD finished Tuesday with modest gains, having return to its recent trading range around $1930 after the wild swings. The bright metal slipped to the lowest level in two weeks at $1906 in the first half of the day amid unabated US dollar demand across the board. However, the bulls returned with pomp and show after the US indices tumbled amid sell-off in tech stocks and worries over the coronavirus vaccine. Pharma company AstraZeneca announced a halt in its vaccine trials over safety concerns, which dashed hopes of a swift recovery from the pandemic and weighed soured the risk sentiment. The omnipresent US-China tensions, this time over the US plans to ban cotton products, and US fiscal deadlock also aggravated the risk-off mood.

So far this Wednesday, gold extends its range play around $1930, divided between concerns over the vaccine and a broadly bid US dollar. Meanwhile, mounting no-deal Brexit fears and dovish expectations from the European Central Bank (ECB) monetary policy decision, due on Thursday, also keep the gold traders on the edge. The sentiment on Wall Street will emerge as a key catalyst in absence of relevant US macro news this Wednesday.

Gold: Daily chart

On the daily chart, gold continues to traverse within a symmetrical triangle pattern since early August and now looks primed for a range breakout.

Over the past month, the price has remained trapped between the 21-day Simple Moving Average (DMA) to the upside while the 50-DMA cushions the downside.

Therefore, investors await a strong catalyst to dive out of the range in either direction. The 14-day Relative Strength Index (RSI) has turned absolutely flatlined since the start of this week, although holds a mild bearish bias around 48.50.

A daily closing below the rising trendline support at $1925 will confirm the triangle pattern and open floors for a test of the $1900 mark. The next downside cap is seen at $1863 (August 12 low).

Alternatively, recapturing the 21-DMA at $1946 on a daily closing basis is critical to negate the ongoing bearish bias.

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.

GBP/USD strengthens to near 1.3400 as UK political risk fades

The GBP/USD pair gathers strength near 1.3395 during the Asian trading hours on Thursday, bolstered by fading domestic political uncertainty. However, hawkish minutes from the Federal Reserve and renewed tensions between the US and Iran might support the US Dollar and cap the upside for the major pair.

EUR/USD sticks to positive bias above 1.1400; Mideast tensions cap gains

The EUR/USD pair attracts some buyers for the second straight day, though it lacks follow-through and remains confined within the previous day's range during the Asian session on Thursday. Spot prices currently trade around the 1.1420 area, up less than 0.10% for the day, and remain at the mercy of the US Dollar price dynamics.

Gold sees more pain as Iran tensions revive inflation fears

Gold price reflects signs of softness on Thursday, trading 0.5% lower at around $4,056 during the Asian trading session. The precious metal is under pressure as Middle East hostilities have revived fears of high global inflation, a scenario that discourages major central banks from easing monetary conditions. This framework bodes well for interest-bearing assets, but diminishes the appeal of non-yielding assets, such as Gold.

Ripple and Stellar extend downside as weakening technicals

Ripple and Stellar extend losses on Thursday, correcting over 6% and 10%, respectively, so far this week. XRP falls below $1.090, while XLM posts a fifth consecutive day of correction and closes below key support levels.

2.50%: Why the Kiwi's first hike in three years is a wager on a number nobody can see

The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at 02:00 GMT on Wednesday, its first hike in three years and the moment the bank that cut deeper than any G10 peer last cycle turned to face the other way.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.