Gold Price Forecast: XAUUSD free-fall aims to $1,600

Valeria Bednarik FXStreet

XAUUSD Current price: $1,667.29

Stock markets trade in the red, reflecting investors’ concerns.
Market players await fresh US inflation data to decide where to go next.
XAUUSD gains bearish traction amid a risk-averse environment.

Spot gold accelerated its decline on Monday and trades near a fresh one-week low of $1,665.62 a troy ounce. Risk aversion dominated financial markets at the beginning of the week as investors continued digesting an upbeat US employment report and the increasing risk of a global recession.

A better-than-anticipated US Nonfarm Payrolls report, showing that the Unemployment Rate fell to 3.5% in September, alongside the creation of 265K new positions, spurred speculation that the Federal Reserve will keep hiking rates by 75 bps. Additionally, Russia escalated its attacks on Ukraine, launching missiles over strategic communication and energy targets.

Global stock markets trade in the red, although activity on Wall Street is limited amid the country celebrating Columbus Day. US indexes operate normally, although the bond market will return from the weekend on Tuesday. Still, investors hold on to caution, as the US will publish the September Consumer Price Index on Thursday.

Gold price short-term technical outlook

The daily chart for XAUUSD hints at further declines ahead as the bright metal trades back below its 20 Simple Moving Average (SMA), which has turned lower. The longer moving averages maintain their downward slopes far above the shorter one, reflecting the dominant bearish trend. Additionally, technical indicators head firmly lower, the Momentum around its midline, but the RSI is already at around 43, also supportive of a bearish continuation.

The 4-hour chart shows that XAUUSD has extended its decline below the 100 SMA and the 38.2% retracement of its $1,765.47/$1,614.81 slump at $1,672.10, an immediate resistance level. Technical indicators head firmly lower near oversold readings, while the 20 SMA gains bearish traction but above the longer ones, still trying to catch up with the latest near-term U-turn.

Support levels: 1,659.70 1,646.70 1,633.05

Resistance levels: 1,672.10 1,684.90 1,692.90

View Live Chart for XAUUSD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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