Gold Price Forecast: XAU/USD eyes $1,830 as critical support holds
- Gold reversed its direction after testing $1,800 earlier in the day.
- XAU/USD remains on track to close above 200-day SMA.
- Next target on the upside is located at $1,830.
After closing the first day of the week in the negative territory, the XAU/USD pair extended its slide and touched a daily low of $1,801.88 on Tuesday. Nevertheless, the risk-averse market environment in the second half of the day helped gold find demand and the pair was last seen trading near $1,815, where it was up 0.22% on a daily basis.
In the absence of high-tier macroeconomic data releases, gold's earlier decline seemed to be a correction of last week's rally, during which XAU/USD rose more than 2%. Moreover, investors may have opted out to book their profits on the last trading day of August. The fact that gold didn't have a difficult time erasing its losses also supports the view that Tuesday's action was technical in nature.
On the other hand, the Conference Board reported on Tuesday that the Consumer Confidence in the US weakened 113.8 in August from 125.1 in July. This reading missed the market expectation of 124 and forced market participants to take a cautious stance.
Reflecting the souring market mood, Wall Street's main indexes remain on track to end the day modestly lower. In the meantime, the US Dollar Index (DXY) managed to rebound from the two-week low it set at 92.40 earlier in the day. Currently, the DXY is flat on the day at 92.69.
Ahead of Friday's August labour market report from the US, gold could stay in a consolidation phase. According to OCBC Bank analysts, a disappointing Nonfarm Payroll report could trigger a rally in XAU/USD toward $1,900.
"Gold closed above $1800 once more on Friday after a two-day hiatus, suggesting interest in gold as an inflation hedge may be returning," analysts said. "We expect gold to possibly head towards $1830 in the near term if the rally continues and possibly to $1900 if this Friday’s job report disappoints."
Gold technical outlook
On the daily chart, the Relative Strength Index (RSI) indicator is moving sideways around 60, suggesting that buyers remain in control of gold's action. Additionally, XAU/USD looks to close the day above the critical 200-day SMA, currently located at $1,810.
On the upside, the initial resistance is located at $1,823 (August 30 high) ahead of $1,830 (static level). Supports are located at $1,810 (200-day SMA), $1,800 (psychological level, ascending trend line coming from August 6) and $1,792 (50-day SMA).
Additional levels to consider
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
