Gold Price Forecast: XAU/USD weak, remains near critical support area
XAU/USD Current price: $1,750.85
- US rises further across the board ahead of next week’s FOMC meeting.
- US 10-year yield approaches 1.40%, holds upside bias.
- XAU/USD remains vulnerable, near the $1,745 zone.
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Gold prices are falling only modestly on Friday, holding firm onto weekly losses. Rising US yields and a stronger US dollar weighed on the yellow metal that is about to post the lowest weekly close since April. On Friday, after hitting $1,766 it turned again to the downside, falling toward the weekly low. So far, it remains above the $1,745 level but is still under pressure.
The 10-year yield stands at 1.37%, near the 1.40% key level. A break higher could trigger another sell-off in Treasuries, weakening gold further. Yields could remain with a positive outlook ahead of the FOMC meeting. The latest round of economic data came in mostly above market consensus, boosting expectations about signs of QE tapering sooner than previously expected. The economic numbers also supported the greenback. The DXY broke above 93.00 to the highest in three weeks.
Gold price short-term technical outlook
The recovery in gold was limited on Friday and it dropped back toward weekly lows. So far, it has been able to hold above the $1,745/50 support; a break lower would clear the way to more losses, initially targeting the $1,725 area. The bearish pressure would be alleviated with a recovery above $1,780.
Gold is testing the 100-week moving average. A close below would be the first one since 2018. The $1,745/50 is also a key medium-term support area; so a consolidation below should point to more weakness over the next weeks from a technical perspective. The next long-term support is seen at the 2021 low around $1,675. On the upside, a solid break above $1,835 should strengthen the outlook for gold.
Support levels: 1,745.00 1,723.50 1,714.95
Resistance levels: 1,768.50 1,779.45 1,795.00
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
