Gold Price Analysis: XAU/USD's potential short-term reprieve if USD pulls back

Gold is on the verge of a correction to give rise to further bearish prospects.
Bears will be seeking resistance to hold in a weekly bearish close.

Ross J Burland FXStreet

Gold prices have deteriorated in the US dollar's relentless comeback as investors move away from stocks.

The price of the dollar is correlated to gold, so it stands to reason that if the dollar is about to tail off its gains, then gold should find reprieve.

The following is a top-down analysis of where the price is anticipated to travel between resistance and support structures, offering further opportunities to the downside.

The opportunities will arise if the US dollar breaks higher on the monthly and daily charts as illustrated below.

Monthly chart

The monthly chart shows that the price has seen a heavy rejection fro the highest levels on record.

The move has snapped four straight months of gains.

Weekly chart

The weekly chart is offering prospects of some further room to the downside.

Daily chart

However, the daily chart is meeting a prior low and a 78.6% Fibonacci retracement.

If the US dollar now stalls, then this could be as about as far as gold will travel for the time being before an upside correction.

Bears will be looking for a weekly close below the resistance structure to give rise to further downside opportunities.

As it stands, the DXY could be about to correct the recent bullish leg and be set on the completion of a bullish 5-wave pattern:

Monthly bullish DXY outlook

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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