Gold Price Forecast: XAU/USD sliding towards key hourly support near $1,927

Update: The price of gold is losing some ground on the day so far following a strong bid on Tuesday. In a prior analysis, the price was forecasted to move in the current trajectory, as follows:

Gold prior technical analysis

''At this juncture, the price would be expected to give back some ground as profits are taken off but trend-followers will potentially reengage all the while the Ukraine crisis remains in the driving seat.''

Gold, live market

The price has followed the projected path and is starting to firm an M-formation. The neckline would be expected to act as resistance and while the price is below there, then the bias is bearish. However, so long as the support around the old resistance near $1,927 holds up, then there will be prospects for a move higher as illustrated above. 

Meanwhile, there is plenty slated for the day ahead, besides the Ukraine crisis, in US events, starting with US president Joe Biden who will be delivering his first State of the Union address with a focus on Ukraine and cost of living. Federal Reserve Chair Powell will then testify before the House Financial Services Committee, delivering the Semi-annual Monetary Policy Report to Congress. There will also be a focus on the ADP employment change that is set to rebound from the omicron decline in January. This comes before the end of the week's Nonfarm Payrolls data. The Federal Reserve’s Beige Book will also be looked into for an update on current economic conditions. 

End of update.

Gold (XAU/USD) drives higher towards $1,950 after juggling in a range of $1,878.10-1,927.48 as investors return to safe-haven assets. The headlines of negotiations between Russia and Ukraine on Monday had increased the risk-appetite of investors as a firmer truce initiative between the nations was highly expected. However, the unavailability of any material outcome turned investors’ interest back to square and the risk-aversion theme underpinned. The nations are likely to come back to table this week to resume chatters on negotiations.

The precious metal has turned more precious after the Maxar satellite images on Tuesday showed that the Russian military surrounding the north of Kyiv had stretched longer to 40 miles approximately than 17 miles, initially reported.

Meanwhile, the US dollar index (DXY) has overstepped 97.00 on upbeat US Manufacturing Purchasing Managers Index (PMI). The Manufacturing PMI reported by the US Institute for Supply Management (ISM) on Tuesday jumped to 58.6 against the market estimates and previous print of 58 and 57.6 respectively. While the US New Orders Index on Tuesday landed at 61.7 outperformed the estimates and prior figures.

Now, investors will focus on testimony from the Federal Reserve (Fed) Chair Jerome Powell, which is due on Wednesday. It would be interesting to see how Fed’s Powell will narrate the overview of upcoming monetary policy and economic situation in times when Ukraine is going through some serious crisis and world economy will face boiling oil prices.

Gold Technical Analysis

On a 15-minute scale, XAU/USD is marching towards $1,975.00 after giving a breakout of a symmetrical triangle, which was in a range of Thursday’s low and Friday’s high at $1,878.22 and 1,921.80 respectively. Usually, a symmetrical triangle denotes an expansion in the size of ticks and depth of volumes after breakout out from a squeeze in the range. The Relative Strength Index (RSI) (14) is holding above 60.00, showing no signs of divergence and overbought. The 50-period and 200-period Exponential Moving Averages (EMA) are scaling higher, which adds to the upside filters and may act as strong support going forward.

Gold 15-minute chart