Gold Price Forecast: XAU/USD remains on the defensive near $1800 mark

Update: Gold struggled to capitalize on the previous day's post-US CPI strong move up from two-week lows and faced rejection near the very important 200-day SMA on Wednesday. The modest intraday pullback dragged the XAU/USD to fresh daily lows during the early European session, though lacked follow-through below the $1,800 mark. A positive risk tone, along with a modest uptick in the US Treasury bond yields, acted as a headwind for the non-yielding yellow metal, though a combination of factors helped limit the downside.

Tuesday's sofer-than-expected US consumer inflation figures eased fears for an earlier tapering by the Fed. Apart from this, worries about the fast-spreading Delta variant and a global economic slowdown extended some support to traditional safe-haven assets, including gold. The market concerns were further fueled by Wednesday's disappointing Chinese macro data, which underscored recent signs of slackening economic momentum in the world's second-largest economy. This, in turn, warrants some caution for bearish traders.

Previous update: Gold prices stall gains near $1,800 after hitting a one-week high on Tuesday. The drop in the US benchmark US Treasury yields supported the current upside movement in the prices the previous day. The movement was primarily sponsored after the softer-than-expected rise in US Inflation data revealed yesterday, which raised the doubts over the Fed’s timeline to taper monetary stimulus.

Weaker equity market and concerns on the rapid spread of the coronavirus delta variant and its impact on the global economic recovery continue to lend support near the lower levels.

Gold takes cues from the major central bank’s views on tapering and economic stimulus. The strength of the US dollar keeps the precious metal gains under check. A higher USD valuation makes gold expansive for other currencies holders.

End of update

Gold (XAU/USD) fades the strongest run-up in a week above $1,800, down 0.15% intraday around $1,801, during Wednesday’s Asian session.

The yellow metal jumped to the week’s high, also broke the monotony surrounding $1,800, after the US Consumer Price Index (CPI) miss clouded Fed tapering concerns the previous day. Even so, a recheck of the details suggests that the inflation figures are high enough to favor Fed hawks when they meet the next week.

The US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months. Fed’s readiness to accept a bit higher inflation figures, terming it ‘transitory’, seems to be at test with almost double YoY figures than the US central bank’s previous target range of near 2.0%.

Following the key data release, the US 10-year Treasury yields dropped the most in a month before recently recovering to 1.29%. It should be noted that the S&P 500 Futures print mild gains by the press time even as the Wall Street benchmarks closed in the red the previous day.

In addition to the re-think over the Fed tapering, covid woes and geopolitical tensions also weigh on the market sentiment, underpinning the safe-haven demand of the US Treasury bonds, which in turn weigh on its yields.

Although the virus numbers from the Asia-Pacific region have eased of late, slower jabbing and doubts over the Delta variant spread challenge the market sentiment. Also weighing on the risk appetite, as well as gold, are hurricanes in the US and political tension in Canada and the Middle East.

Looking forward, gold traders will keep their eyes on the more clues to confirm the next week’s tapering from the Fed. The same highlights Thursday’s Retail Sales and Friday’s Michigan Consumer Confidence. For today, risk catalysts and the US Industrial Production for August, expected to ease from 0.9% to 0.5%, could offer intermediate moves.

Technical analysis

Despite crossing an immediate trading range between $1,782 and $1,804, gold prices failed to provide a daily closing beyond the 200-DMA level near $1,809.

Also challenges the gold buyer is the sluggish MACD and RSI conditions, as well as double tops surrounding $1,834.

Meanwhile, 61.8% Fibonacci retracement of July-August fall, around $1,777, adds to the downside filters, other than the multiple lows marked recently near $1,782.

It’s worth observing that five-week-old horizontal support of around $1,758 will challenge gold bears below $1,777.

Overall, gold remains firmer but needs to cross the 200-DMA for giving controls to the bulls.

Gold: Daily chart

Trend: Pullback expected

Additional important levels

Today last price 1801.69
Today Daily Change -2.71
Today Daily Change % -0.15%
Today daily open 1804.4
Daily SMA20 1801.04
Daily SMA50 1798.43
Daily SMA100 1816.14
Daily SMA200 1809.09
Previous Daily High 1808.67
Previous Daily Low 1780.73
Previous Weekly High 1830.32
Previous Weekly Low 1782.47
Previous Monthly High 1831.81
Previous Monthly Low 1687.78
Daily Fibonacci 38.2% 1798
Daily Fibonacci 61.8% 1791.4
Daily Pivot Point S1 1787.2
Daily Pivot Point S2 1769.99
Daily Pivot Point S3 1759.26
Daily Pivot Point R1 1815.14
Daily Pivot Point R2 1825.87
Daily Pivot Point R3 1843.08



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD remains pressured after US data misses estimates

EUR/USD is trading closer to 1.1750, paring its recovery from earlier in the day as the safe-haven dollar is bid. US Consumer Sentiment missed estimates with 72 points in September. The financial woes of China's Evergrande are weighing on sentiment.


GBP/USD trades under 1.38 amid on UK data, dollar strength

GBP/USD is on the back foot, trading under 1.38 after UK Retail Sales figures disappointed with -0.9% in August, worse than expected. Brexit uncertainty and dollar demand weighed on the pair earlier. 


XAU/USD surrenders intraday gains, drops closer to $1,750 level

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. 

Gold News

Experts say Ripple will win SEC lawsuit, which might propel XRP to new all-time highs

The latest development in the ongoing SEC vs. Ripple lawsuit is that documents are classified as privileged and blocked for public viewing. Though institutional investors are yet to take big bets on the altcoin in 2021, retail investors are actively trading in XRP.

Read more

US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Consumer outlook expected to rebound to 72.2 in September. August’s 70.2 was the lowest since December 2011. Inflation and Delta variant wearing on US optimism. Markets face negative dollar risk from fading consumer optimism.

Read more