Gold Price Forecast: XAU/USD plunges to near $1,860 as DXY gets an adrenaline rush
- Gold price has slipped sharply after failing to surpass $1,880.00n advancing hawkish Fed bets.
- The DXY has crossed 104.50 amid higher price pressures and a tight labor market.
- A formation of an upthrust in the gold prices indicates a buying climax.
Gold price (XAU/USD) has witnessed a vertical fall after failing to overstep the round-level resistance of $1,880.00. The precious metal advanced sharply on Friday above $1,870.00, attempted to balance above $1,870.00 in the early Asian session but failing to surpass $1,880.00 drifted the gold bulls lower.
A steel fall after an inventory distribution at the open is expected to bring more weakness in the counter. The gold prices have witnessed extreme selling pressure on rising odds of a 75 basis point (bps) interest rate hike by the Federal Reserve (Fed). Soaring price pressures and the upbeat Nonfarm Payrolls (NFP) are expected to compel the Fed to sound extremely hawkish.
The US Consumer Price Index (CPI) landed at 8.6%, higher than the estimates and the former figure of 8.3%. While, the core CPI was released at 6%, higher than the expectations of 5.9%. This indicates that higher food and oil prices are contributing to the inflationary pressures.
Meanwhile, the US dollar index (DXY) is advanced strongly higher above 104.50 on expectations of an extreme hawkish policy by the Fed.
Gold technical analysis
On an hourly scale, the gold prices have witnessed a sell-off after forming an upthrust near $1,880.00, which signals a buying climax, followed by a bearish reversal. The precious metal is holding above the 200-Exponential Moving Average (EMA) at $1,852.20 but is expected to tumble further to near the critical support of $1,830.00. The Relative Strength Index (RSI) (14) has shifted into a 40.00-60.00 range from the bullish range of 60.00-80.00, which signals exhaustion in the upside trend.
Gold hourly chart
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
