Gold Price Forecast: XAU/USD recovers early lost ground, flat-lined below $1,760 level


  • Gold managed to attract some dip-buying on Wednesday amid the risk-off impulse.
  • A stronger USD capped any meaningful upside for the dollar-denominated commodity.
  • Investors also seemed reluctant to place aggressive bets ahead of Friday’s NFP report.
  • Gold Price Forecast: Why XAU/USD looks vulnerable below $1750?

Gold reversed an intraday dip to multi-day lows and moved back closer to the top end of its daily trading range, around the $1,758 region during the early North American session. Worries that the recent surge in crude oil/energy prices will stoke inflation and derail the global economic recovery weighed on investors' sentiment. Apart from this, fragile US-China trade ties, China Evergrande’s debt crisis and a stalemate over the US debt ceiling triggered a fresh wave of the global risk-aversion trade on Wednesday. This was evident from a sharp corrective slide in the equity markets, which, in turn, was seen as a key factor that extended some support to the safe-haven XAU/USD.

That said, a strong US dollar rally back closer to one year tops acted as a headwind for dollar-denominated commodities, including gold. The greenback continued drawing support from expectations that the Fed would begin rolling back its massive pandemic-era stimulus as soon as November. The markets might have also started pricing in the possibility of a rate hike in 2022 amid fears of a faster than expected rise in inflation. The speculations for an early tightening by the Fed were cemented by the upbeat ADP report, which showed that private-sector employers in the US added 568K jobs in September. This was well above 428K anticipated and the previous month's downwardly revised reading of 340K.

Meanwhile, the global flight to safety led to a modest pullback in the US Treasury bond yields and kept a lid any further gains for the USD, though did little to boost the non-yielding gold. Investors also seemed reluctant to place any aggressive bets, rather would prefer to wait on the sidelines heading into this week's release of the closely-watched US jobs data. The popularly known NFP report will be published on Friday and play a key role in determining the next leg of a directional move for the XAU/USD. In the meantime, the precious metal seems more likely to continue with its two-way price moves, within a narrow trading band held over the past four trading sessions.

Technical levels to watch

From a technical perspective, the recent range-bound price action makes it prudent to wait for a convincing break in either direction before placing aggressive bets. Hence, any subsequent recovery move might confront some resistance near the $1,770 region, or one-and-half-week tops touched on Monday. The next relevant hurdle is pegged near the $1,774-75 region ahead of the $1,783-84 area, above which bulls are likely to aim back to reclaim the $1,800 round-figure mark. The latter coincides with the very important 200-day SMA and should act as a key pivotal point for short-term traders.

On the flip side, the $1,750-48 region, or the lower boundary of the weekly trading range, now seems to have emerged as immediate strong support. A convincing break below will set the stage for a slide towards the $1,729 intermediate support en-route September monthly swing lows, around the $1,722-21 region. Some follow-through selling would turn gold vulnerable to accelerate the downward trajectory towards challenging the $1,700 round-figure mark before eventually dropping to multi-month lows, around the $1,687-86 region touched on August 9.

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 struggles to rebound, holds near 1.1150 after US data

EUR/USD trades around 1.1150 in the early American session on Friday as investors assess the latest inflation data from the US. According to the US Bureau of Economic Analysis, Core PCE Price Index rose to 4.9% on a yearly basis in December from 4.7% in November, surpassing the market expectation of 4.8%. 

EUR/USD News

GBP/USD clings to small gains above 1.3400 on mixed US data

GBP/USD posts modest daily gains slightly above 1.3400 on Friday as the dollar rally loses steam. The data from the US showed that the core PCE inflation edged higher to 4.9% in December. On a negative note, Personal Spending contracted by 0.6% on a monthly basis.

GBP/USD News

Gold recovers modestly after US data, stays below $1,800

Gold managed to stage a rebound from the multi-week low it set below $1,780 but continues to trade deep in the red near $1,790. The benchmark 10-year US Treasury bond yield is rising more than 1% on the day after US data, limiting XAU/USD's recovery.

Gold News

Bitcoin Weekly Forecast: Federal Reserve cannot tame BTC’s uptrend

Bitcoin has experienced some significant losses over the past few weeks, with a more dramatic drop occurring this week after the Fed's decision was announced. As losses have extended and BTC has entered into the $30,000 zone, concerns regarding Bitcoin being in a bear market have increased.

Read more

Apple share price set to rise after another record quarter

With the Nasdaq closing at its lowest level in seven months yesterday, the Apple share price has also found itself on the end of the recent weakness in tech shares, down over 12% from its record highs in early January.

Read more

Forex MAJORS

Cryptocurrencies

Signatures