Gold Price Forecast: XAU/USD erases gains, back under pressure below $1820
- Gold reversed from two-day highs and is back near weekly lows.
- US dollar rises across the board following comments from Portugal.
Gold prices dropped sharply during the American session, erasing daily gains. XAU/USD peaked at $1833, the highest level in two days and then turned lower, falling to $1814, slightly above the daily low of $1811.
The reversal took place amid a rally of the US dollar. The DXY jumped toward 105.00, the highest level in a week. It is rising for the second day in a row as market concerns remain in place.
US yields eased on Wednesday even as central bankers offered a hawkish tone from Portugal where the European Central Bank is having its annual meeting. Fed Chair Powell warned about the risk to the economy from higher interest rates; however made it clear the biggest risk is losing price stability. ECB President Lagarde said they will consider the “anti-fragmentation” tool at the July meeting.
Short-term outlook
The bounce from $1811 weakened before reaching at $1835, a short-term downtrend line. A break above the mentioned level should open the doors to more gains, targeting initially $1845 and then levels above $1850.
While under $1835 the outlook is biased to the downside, with rising risks of more losses below the 20-Simple Moving Average in four-hour charts (currently at $1825).
XAU/USD is testing $1815 and below attention would turn to $1811 (June 29 low) and then to $1804 (June 14 low), the last defense of $1800.
Techincal levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
