Gold Price Forecast: Bulls hunting down $1,810, bears lean on resistance

  • Gold bulls are back in the driving seat and are hunting down territory in the $1,800s.
  • It is the Fed blackout period, but the hawks are circling over next week's Fed meeting. 

Gold prices are higher on the day so far, trading some 0.27% in the green at the time of writing. XAU/USD has drifted from a low of $1,783.80 into a high of $1,798.47 on a relatively slow start to the week. 

Meanwhile, the greenback has been showing signs of resilience and has also moved higher. Ad measured against a basket of currencies in the DXY index, the US dollar scored a two-week high at 92.885 before falling into the hands of the bears in London. DXY has since dropped to a low of 92.556. 

The week ahead will hold key data for the US calendar in the last remaining days ahead of the Federal Reserve meeting on the 21 -22 Sep. US Consumer price data on Tuesday will give a broad picture of the economy's progress ahead of the Fed meeting next week.

Retail Sales and productions figures also are slated for later this week. However, US jobs data, Jobless Claims, might offer more clues for investors considering the Fed regards anything inflationary to be transitory and it has left an emphasis on the jobs market. 

Gold capped on hawkish Fed speak

Fedspeak is shrugging off the disappointing Nonfarm Payrolls report and continues to suggest that conditions for tapering could be met this year. It is the Fed's blackout period, but yesterday, the Philadelphia Fed President Patrick Harker became the latest official to say he wants the central bank to start tapering this year, saying in a Nikkei interview that he was keen to scale back asset purchases.

Additionally, The Wall Street Journal reported on Friday that Fed officials will seek to make an agreement to begin paring bond purchases in November. Fewer dollars in circulation is presumed to be a headwind for gold prices as tapering would be expected to underpin US dollar strength. 

Noting other Fed speakers, analysts at Brown Brothers Harriman noted that most Fed officials sounded as if they are looking through the weak August jobs report and still want to taper this year:

''Mester said Friday that 'I don’t think the August employment report has changed my view that we’ve made substantial further progress. I would like us to begin tapering sometime this year.' 

This followed similar comments from Williams, Bowman, and Kaplan last week. Our best guess is that the Fed announces a formal timeline for tapering at the November 2-3 meeting and starts tapering at the December 14-15 meeting.  Sure, it’s possible the Fed waits until January but really, why wait?''

TDS's gold outlook

''Gold holdings have declined substantially reflecting a shift in investor perspectives from inflation-hedging to safe-haven flows, as reflation tailwinds peaked,'' analysts at TD Securities argued. 

''Our ChartVision framework argues that gold prices need only breach $1870/oz by year-end for an uptrend to form, while silver would need to break north of $27.40/oz,'' the analysts said. ''In turn, we entered into an inverse-vol weighted long-short position in gold/silver, expecting the yellow metal to outperform silver in the coming months.''

Gold technical analysis

The bears are below the subjective dynamic trendline supports so there are prospects of a downside continuation. 

However, the bulls are taking charge and there is every chance that the 50% mean reversion target can be achieved in the consolidation phase and reaccumulation taking place currently. 

This falls in near to $1,810 and guards a break to the 61.8% ratio and prospects of a higher continuation thereafter. 

If the resistance between the 50% mean reversion and the counter trendlines hold, then the bears will be in charge and seeking out the $1,750s in due course. 

Gold, deeper technical analysis

There is deeper analysis on these scenarios, here: Gold, Chart of the Week: XAU/USD bears seek break of $1,770


Today last price 23.72
Today Daily Change -0.05
Today Daily Change % -0.21
Today daily open 23.77
Daily SMA20 23.88
Daily SMA50 24.68
Daily SMA100 25.87
Daily SMA200 25.89
Previous Daily High 24.3
Previous Daily Low 23.73
Previous Weekly High 24.82
Previous Weekly Low 23.73
Previous Monthly High 26
Previous Monthly Low 22.17
Daily Fibonacci 38.2% 23.95
Daily Fibonacci 61.8% 24.08
Daily Pivot Point S1 23.57
Daily Pivot Point S2 23.36
Daily Pivot Point S3 23
Daily Pivot Point R1 24.13
Daily Pivot Point R2 24.5
Daily Pivot Point R3 24.7



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