Gold Price Forecast: XAU/USD’s path of least resistance is down as dollar stays bid

Gold remains pressured, as the dollar remains favored.
US-China escalation could save the day for XAU bulls.
Technical set up remains in favor of the bears.

Dhwani Mehta FXStreet

Gold (XAU/USD) remained under pressure amid US holiday-led light trading and settled Monday around $1929, having formed lower highs for the fourth straight session. Gold held onto its recent trading range, with the downside bias intact amid a broadly firmer US dollar. The uptick in the European stocks added to the weight on the safe-haven gold. Investors shrugged-off last week’s correction in the US stocks and ongoing US-China tensions. The Sino-American tech war escalated on Monday following a report that the US is considering imposing export controls on China’s state-owned Semiconductor Manufacturing International Corporation (SMIC).

On early Tuesday, the greenback trades on the front foot amid a bearish view on the euro, in light of dovish ECB expectations. Meanwhile, the sell-off in the pound due to growing no-deal Brexit fears also helps keep the buoyant tone intact around the dollar. Therefore, gold is likely to remain less preferred, as the US traders return after a long weekend. However, any escalation on the US-China front could offer temporary respite to the XAU bulls. According to the latest NY Times report, the US is considering a ban on cotton from China’s Xinjiang province.

Gold: Hourly chart

Following the downside consolidation overnight, gold broke the range to the downside, confirming a symmetrical triangle breakdown on the hourly sticks. The price closed below the rising trendline (pattern) support at $1927.42.

The move lower exposes the pattern target at $1895. Ahead of that level, the bulls could defend last Friday’s low of $1916.42. A break below which will put a $1900 mark to test. The 14-day Relative Strength Index (RSI) points south in the bearish territory, backing the case for additional declines.

Alternatively, the recovery attempts could meet the robust upside barrier around $1930, the confluence of the bearish 21-hourly Simple Moving Average (HMA), pattern resistance and horizontal 50-HMA.

A sustained break above the latter could fuel a rally towards the next hurdle of the downward-sloping 100-HMA at $1940. Acceptance above the horizontal 200-HMA at $1949.29 is critical to recall the buyers.

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.

AUD/USD holds rebound near 0.6900 on US-China trade optimism

AUD/USD holds the rebound near 0.6900 in the Asian session on Monday. Mixed China's inflation data for October fails to provide any inspiration to the Chinese proxy, the Australian Dollar, but China's extension of the suspension of 24% tariffs on US goods and reduced US-Iran tensions help the Aussie pair cling to recovery gains.

USD/JPY retreat in sync with USD, appraches 158.00

USD/JPY is back in the red at the start of the week on Monday, eyeing the broad US Dollar retreat amid easing US-Iran tensions. Traders also resorting to profit-taking following the blockbuster US Nonfarm Payrolls data-led rally. US CPI report is next in focus.

Gold bounces back above $4,100 amid easing Iran risks

Gold price recovers some lost ground and regains $4,100 during the Asian trading hours on Monday. Speculations that incoming Democrats would push to end the Iran war lift the yellow metal amid latest comments from US President Donald Trump that new strikes on Iran are unlikely if talks progress.

Weekly forecast: A resilient US Dollar faces its next big test?

The US Dollar (USD) weathered the post-US midterm election results better than expected, adding to the previous week’s bullish move and managing to keep the trade above the key 102.00 barrier on the US Dollar Index (DXY).

AI selloff: What bonds and credit markets reveal

The recent selloff in US technology stocks has left investors with a difficult question. Are we simply looking at a correction after months of strong performance, or is the market starting to reflect deeper problems in the economy? The Nasdaq 100 has lost as much as 16.3% from its record high, while the Philadelphia Semiconductor Index has experienced an even sharper decline.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.