Gold Price Forecast: XAU/USD vulnerable amid risk-on rally in stocks on US stimulus hopes

Gold (XAU/USD) settled in the green zone on Wednesday despite failing several attempts to regain the $1900 mark. The yellow metal benefited from broad-based US dollar weakness, spurred by the market optimism about a potential US stimulus and dovish FOMC minutes. House Speaker Nancy Pelosi hinted readiness to an airline-support aid in talks with Treasury Secretary Steven Mnuchin after President Donald Trump abandoned stimulus negotiations late Tuesday. However, the upside in the yieldless gold remained limited by the risk-on rally on Wall Street.

Markets look forward to the US weekly Jobless Claims data slated for release later on Thursday for fresh updates on the US economic recovery and risk sentiment. In the meantime, gold will continue to trade on the defensive amid an uptick in the US stock futures, with the downside likely to be cushioned by broad dollar weakness. Markets shrug-off an unimpressive, although a civilized US Vice Presidential debate held earlier this morning.

Gold: Short-tern technical outlook

Hourly chart

As observed on the hourly chart, the spot is teasing a symmetrical triangle breakdown while flirting with the rising trendline support at $1885.

On confirmation of the bearish breakdown, gold could tumble towards the key support at $1860, which is the pattern target.

The hourly Relative Strength Index (RSI) trends in the bearish zone, backing the case for further declines. However, Wednesday’s low of $1873 could challenge the bears’ commitment.

Alternatively, recapturing the 21-Hourly Moving Average (HMA) at $1887 on a sustained basis is critical to take on the next robust resistance at $1893. That level is the confluence of the 50 and 200-HMAs.

Further north, the $1900 level would be back in play.