Gold Price Forecast: XAU/USD weakens further below $1,800 mark, dives to 1-1/2 month lows


Update: Gold witnessed another downswing during the early North American session and dropped to $1,775 region, or the lowest level since May 5 in the last hour. The US dollar built on the post-FOMC strong positive move and shot to over two-month tops on Thursday. This, in turn, was seen as a key factor that acted as a headwind for dollar-denominated commodities, including gold.

It is worth recalling that the Fed on Wednesday stunned investors and brought forward its projections for the first post-pandemic interest rate hikes into 2023. The Fed also indicated that it will soon work on tapering down the current $120 billion in monthly bond purchases, which further contributed to driving flows away from the non-yielding yellow metal.

Apart from this, the downfall could further be attributed to some technical selling below the $1,800 round-figure mark. This comes on the back of the overnight sustained break below the very important 200-day SMA and sets the stage for additional weakness. That said, extremely oversold conditions might help limit any further losses for gold, at least for now.

Apart from this, a generally softer tone surrounding the equity markets and a modest pullback in the US Treasury bond yields might hold traders from placing any aggressive bets around gold. Nevertheless, the bias remains tilted in favour of bearish traders and supports prospects for a slide towards testing the next relevant support near the $1,760-58 region.

Previous update: Gold price snapped its recovery mode and resumed its downtrend, now flirting with fresh monthly lows just above $1800. Resurgent supply in the European session prompted another downswing for gold price, as the dead cat bounce witnessed earlier in the Asian trades vanished.

The European traders hit their desks and reacted to Wednesday’s US Federal Reserve’s (Fed) hawkish surprise, fuelling a fresh leg up in the US dollar across the board. The Fed hinted a sooner-than-expected rate hike while keeping tapering expectations alive. The US dollar index jumped from 91.33 to 91.76 after the Asian consolidation, hitting fresh two-month highs. However, the US Treasury yields remain on the defensive, although hold onto the post-FOMC rally, keeping the bearish pressures intact on gold price.

The Fed-induced blow on gold price is likely to have a lasting impact, as attention now turns towards the US weekly Jobless Claims data for fresh trading impetus.

Read: Gold Price Forecast: ‘Buy the dips’ rescues XAU/USD after the Fed-blow, but for how long?

Gold Price: Key levels to watch

The Technical Confluences Detector shows that gold price is challenging the critical support around $1802, the convergence of the previous day low and Bollinger Band 15-minutes Lower.

Sellers remain poised to test the key SMA100 one-day at $1797 is the latter caves in.

The next downside target is aligned at the pivot point one-day S1 of $1789.

However, if the $1800 round number holds up, a bounce-back towards $1810 could be in the offing. That level is the pivot point one-month S1.

Gold bulls will then flex their muscles to probe $1817, the intersection of the SMA10 one-hour and Fibonacci 23.6% one-day.

Recapturing $1822 is critical to negate the bearish momentum in the near term. The powerful resistance is the confluence of the Fibonacci 61.8% one-month and the previous high four-hour.

Here is how it looks on the tool       

fxsoriginal

About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

 

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 hovers around 1.18 amid risk-off mood, US data miss

EUR/USD is trading around 1.18, down on the day as the US dollar benefits from the risk-off mood. Worries about covid, China's techlash and tensions ahead of the Fed are weighing on sentiment. US Durable Goods Orders missed estimates with +0.8% in June.

EUR/USD News

GBP/USD recaptures 1.38 as the dollar pares gains

GBP/USD is trading above 1.38, as the safe-haven dollar gains have faded away after a risk-off mood earlier in the day. The pound benefited from the drop in British covid cases. 

GBP/USD News

Gold battles $1,800 as USD lingers near highs

Gold prices loiter near the $1,800 mark for the past five trading sessions. The US dollar remains steady near the four-month high ahead of the Fed’s interest rate decision. The prices moved cautiously despite the general negative sentiments surrounding the greenback.

Gold News

Dogecoin to retest critical support before overcoming doubt

Dogecoin price thrilled investors after posting a 17% surge on July 26. Following the swing high, DOGE has wiped out most of those gains as it retraces.

Read more

FX: 10 things to watch this week

Taking a look at the economic calendar, it is set to be a busy week for the forex market. There’s a central bank rate decision, GDP, inflation and employment reports scheduled for release. A number of big tech companies have ...

Read more

Forex MAJORS

Cryptocurrencies

Signatures