Gold Price Analysis: XAU/USD's technical bearish picture to allow for more declines

Gold price is extending the previous decline, undermined by the dollar’s demand. Thursday’s European Central Bank (ECB) monetary policy decision and US Consumer Price Index (CPI) data are set to highlight policymaker’s thinking about monetary stimulus. Meanwhile, gold’s four-hour chart paints a bearish picture heading into the key event risks, FXStreet’s Dhwani Mehta briefs.

See – Gold Price Analysis: Lower US Real Yields to lift XAU/USD towards $1943/66 – Credit Suisse

Risks appear skewed to the downside for XAU/USD

“The greenback holds the higher ground, despite the market optimism, as investors resort to repositioning ahead of the all-important ECB announcement and US inflation release. These key events will shed light on the pace of global recovery and policymakers’ thinking about paring back stimulus.”

“If the US CPI print comes in hotter than the consensus of a 0.4% rise in May, it will ramp up the Fed’s tapering expectation, which will render negative for the non-yielding gold. The ECB could also hint towards dialling back of the emergency bond-buying programme.”

“Sellers could target the immediate support at the horizontal trendline connecting previous lows at $1881. A breach of the latter could trigger a drop towards the June 4 low of $1856. Ahead of that, a demand area around $1865 could offer some reprieve to the bulls.”

“Any recovery attempt could face stiff resistance around the $1891-$1895 region, where the 21, 50 and 100-simple moving averages (SMA) collide. Further up, the triangle resistance at $1900 will challenge the bullish commitments. The previous month high at $1913 is the level to beat for the optimists.”