|

Gold Price Forecast: XAU/USD’s bearish bias intact ahead of a big week

  • Gold steadies near two-month lows, as the US dollar slips early Monday.  
  • Technical set up points to the additional downside in the near-term.
  • US election debate and Non-Farm Payrolls data – key event risks this week.

Gold (XAU/USD) has started out a critical week on a cautious note, ranging within a striking distance of the two-month lows of $1849. Although the downside appears cushioned, at the moment, as the safe-haven US dollar loses further ground across its higher-yielding rivals. The Asian market mood remains buoyed by the renewed optimism on the Chinese economic recovery after industrial profits in the world’s second-largest economy rose for the fourth straight month. Further, uncertainty over the US political scenario, with the election debate in focus this week, and the pre-Non-Farm Payrolls release anxiety keep the dollar bulls unnerved.

Meanwhile, markets also pay close attention to the US CFTC data released late Friday, which showed that speculators held a big net short position in the greenback, near its highest levels in almost a decade. Amid a light data docket in the day ahead, the risk sentiment and US dollar dynamics will continue to play out, in the face of the looming coronavirus risks and US fiscal stimulus uncertainty.

Note that the yellow metal finished last week 4.5% lower amid unabated demand for the US currency as an ultimate safe-haven. The dollar’s ascent, however, stalled towards the weekly closing, as the US stocks recovered ground and lifted the market mood.

Gold: Short-tern technical outlook

Hourly chart

fxsoriginal
Gold’s hourly chart shows that it wavers within a pennant so far this Monday, challenging the critical barrier at $1863 on the road to recovery. That level is the confluence of the 21 and 50-hourly Simple Moving Averages (HMA).

Although the bulls are likely to have little luck in their attempt, as the short-term averages have charted a bearish crossover. The 21-HMA is cutting the 50-HMA from above, suggesting the recovery attempts are likely to fade out, opening doors for fresh declines.

The hourly Relative Strength Index (RSI) remains sidelined just below the midline in the bearish region, further backing the case for limited upside potential.

To the downside, the two-month lows of $1949 will be threatened, below which the powerful 100-day Simple Moving Average (DMA) at $1847 will be on the sellers’ radar. All in all, the path of least resistance is to the downside.

Author

Dhwani Mehta

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.

More from Dhwani Mehta
Share:

Editor's Picks

AUD/USD turns south toward 0.6900 as USD firms up

AUD/USD sees fresh selling and drops toward 0.6900 in late Asian trading on Monday, as renewed US Dollar strength weighs on the pair amid lingering Middle East and Russia-Ukraine geopolitical tensions. Focus remains on Oil prices, Treasury bond yields, and RBA expectations for fresh trading impetus in the major.

USD/JPY retakes 158.00 amid hawkish BoJ bets, firmer USD

USD/JPY erases losses and retakes 158.00 in the Asian session on Monday, trading within a one-week-old range. Geopolitical uncertainty continues to underpin the US Dollar, despite fading Fed rate hike hopes, supporting the pair's rebound. However, further upside could be capped by hawkish BoJ expectations and looming intervention risks that could support the Japanese Yen.

Gold languishes below $4,200 amid high US yields

Gold trims some losses on Monday, but remains trapped within previous ranges, with upside attempts limited below $4,200 and with two-month lows of $4,110 at a short distance. The recent pullback on the US Dollar Index has provided some support for precious metals although the high US Treasury yields are keeping a floor on US Dollar dips so far.

Pi Network risks a steeper decline as bearish momentum builds

Pi Network extends losses below $0.090 maintaining a steady decline for the fifth consecutive day. The retail demand remains firm, with the notional value of active perpeutals holding above $10 million. The technical outlook for PI remains bearish as bearish momentum mounts.

ISM Services PMI expected to show robust US economy in September

On Monday, we’ll get the latest read on the US services sector when the Institute for Supply Management publishes its September gauge. Consensus points to a marginal uptick to 55.7 from August’s 55.4. If confirmed, the reading is unlikely to significantly dent the current sector’s resilience and confidence in the broader economy.

The Euro is near a one-year low: Inflation could trigger its rebound, not its fall

EUR/USD has fallen to its lowest level since May 2025. The pair hit 1.1312 on Wednesday and trades well below the January peak of 1.2082. The decline reflects a powerful combination of US Dollar strength, geopolitical uncertainty and renewed concerns about Europe's exposure to higher energy prices.