Gold Price Forecast: XAU/USD drops to near two-week lows, below $1,785 level

Gold struggled to capitalize on the move or find acceptance above the $1,800 mark and dropped to near two-week lows, closer to the $1,780 region during the early North American session. The US dollar built on its recent bounce from the post-NFP swing lows and climbed to one-week tops. This, in turn, was seen as a key factor that acted as a headwind for dollar-denominated commodities and prompted fresh selling on Wednesday. This marked the third consecutive day of a negative move for the precious metal. 

The latest US monthly jobs report released on Friday showed that the economy added the fewest jobs in seven months, dashing hopes for an imminent Fed taper announcement at the September meeting. However, investors seem convinced that the US central bank might still begin rolling back its pandemic-era stimulus in November. This was reinforced by the recent surge in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot to the highest level since mid-July, around 1.385% on Tuesday and helped revive the USD demand.

Meanwhile, concerns that the resurgence of COVID-19 cases could derail the economic recovery took its toll on the global risk sentiment. This was evident from a generally weaker tone around the equity markets and extended some support to traditional safe-haven assets. The flight to safety triggered a fresh leg down in the US bond yields, which further helped limit any deeper losses for the non-yielding gold. That said, the lack of any buying interest suggests that this week's corrective pullback from multi-week tops might still be far from being over.

Technical outlook

From a technical perspective, the overnight sharp pullback reaffirmed a strong barrier near the $1,832-34 region and constitutes the formation of a bearish multi-top chart pattern. A subsequent fall and acceptance below the $1,800 mark adds credence to the bearish bias and supports prospects for a further near-term depreciating move. Hence, some follow-through weakness towards the next relevant support, around the $1,778-76 region, remains a distinct possibility.

On the flip side, a sustained move back above the $1,800 mark might trigger a short-covering bounce and lift gold towards the $1,821-22 supply zone. Any subsequent move up might continue to confront stiff resistance near the $1,832-34 region, which if cleared decisively will negate any near-term negative bias. The XAU/USD might then accelerate the momentum towards the $1,853 intermediate resistance en-route the $1.868-70 region.


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: Bulls step in at month-end, eyeing the upside

EUR/USD is set to close off a bearish week towards a test of 1.11 the figure after breaking out of the bearish weekly wedge to the downside. Bulls have an eye on the weekly M-formation and prospects of a significant correction. 


GBP/USD slumps toward 1.3350, renews five-week lows

GBP/USD stays under constant bearish pressure on Thursday and trades at its lowest level since late December below 1.3370. Following the upbeat growth data from the US, the US Dollar Index is rising more than 0.7% on the day above 97.00. 


Gold licks wounds at three-week low near $1,800 amid firmer USD

Gold bears take a breather around $1,797 as Friday’s Asian session begins, following a $50 slump in the last two consecutive days to a three-week low. The yellow metal awaits fresh clues after piercing the $1,800 threshold the previous day.

Gold News

Bitcoin struggles against resistance as bulls keep their eye on $40,000

Bitcoin price action faced intense selling pressure after the Fed’s decision, with Bitcoin losing more than 5% from its Wednesday high. If the sell-off from the top wasn’t discouraging enough for bulls, then the daily close in the red certainly added insult to injury.

Read more

Apple (AAPL) Earnings for Q1 beats estimates on EPS and revenue

Apple (AAPL) reported earnings after the close on Thursday. Earnings per share (EPS) came in at $2.10 versus the estimate of $1.89. Revenue was $123.9 billion versus the estimate for $118.66 billion. AAPL is trading at $162.40 in Thursday's aftermarket, a change of 2% versus the regular session close of $159.16.

Read more