Gold Price Forecast: XAU/USD picks up, nears $4,900 in risk-off markets

Gold shows a moderate bullish tone on Friday, approaching the $4,900 level.
Weak US labour data and higher hopes of Fed cuts have provided some support to precious metals
Recent Price action suggests a potential Gartley formation, aiming for $5,340

Guillermo Alcala FXStreet

Gold (XAU/USD) is trimming some losses on Friday, trading near $4,880 at the time of writing, after bounding from lows at $4.655 during the Asian session. A risk-averse market mood is providing some support to precious metals, although the US Dollar’s strength is keeping upside attempts limited for now.

Gold drew some support from weak US employment data released earlier this week, which has reactivated pressure on the Federal Reserve to ease borrowing costs further. Beyond that, investors have turned averse to risk, following a three-day sell-off on Wall Street that has spilled over into Forex markets, increasing demand for safe havens like Gold.

Technical Analysis. Potential Garltey pattern aiming to $5,340

The 4-hour chart shows XAU/USD trading at $4,876, capped below the 100-period Simple Moving Average (SMA), but with technical indicators suggesting an improving momentum. The Moving Average Convergence Divergence's (MACD) negative histogram is contracting, and the MACD line seems about to close above the signal line. The Relative Strength Index has reached a neutral area coming from bearish levels.

The immediate trend remains negative, but Thursday's higher low gives some hope for bulls. The upward turning indicators suggest that the pair would be in a CD leg of a Gartley pattern, aiming towards the 78.6% Fibinacci resistance of last week's sell off, at $5,340.

Before that, however, the precious metal is likely to find resistance at the mentioned 100-period SMA, now around $4,920, and at the weekly high, in the area of $5,100. Support levels are at session lows of $4,655, and Monday's low, at the $4,400 area.

(The technical analysis of this story was written with the help of an AI tool.)

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

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