Gold Price Forecast: XAU/USD eyes weekly lows near $1775 ahead of Jackson Hole showdown

Update: Gold has resumed its bearish momentum in the European session, extending losses further below the $1800 mark while targeting the weekly lows of $1777. The buying resurgence around the US dollar remains unabated so far this Thursday, as a flight to safety underpins the greenback’s safe-haven appeal. Meanwhile, markets resort to repositioning their dollar trades ahead of the all-important Fed’s Jackson Hole Symposium, starting later on Thursday. Also, in focus remains the US Q2 GDP and jobless claims data for fresh trading cues.

From a technical perspective, gold price is challenging the 21-Daily Moving Average (DMA) at $1785 once again. A daily closing below the latter could confirm a bearish reversal following a rejection at the 200-DMA at $1810 earlier this week. The next stop for the bears is seen at the one-week lows, below which the August 16 low of $1771 could come into play. Alternatively, recapturing 50-DMA at $1791 on a sustained basis is critical to attempting a meaningful recovery towards the $1800 level.

Read: Fed Chair Powell’s Jackson Hole Speech: Caution will win out

After testing the high of $1,805  in the overnight session, gold prices edge lower on Thursday. Prices dip toward $1780 in the US session but bounced back above $1,800. Again, the precious metal started the journey to the south after breaking the $1,800 level.

At the time of writing, XAU/USD is trading at $1,788, down 0.11% for the day.

Investors ditched the yellow metal on reducing the risk of the Delta coronavirus concern, which could derail the pace of global growth economic recovery. The sentiment shifted after US FDA fully approved Pfizer/BioNTech vaccine.

The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies, remains strong near 93.00.

Market sentiment turns cautious ahead of US Federal Reserve Chair Jerome Powell’s speech on Friday, which could provide a hint over economic stimulus. But the narrative post the US central bank’s last policy meeting suggests Powell might avoid making any firm commitments about the timing of tapering, but might drop a signal it will be announced before the end of the year.

The lower US Treasury yields reduce the opportunity cost of holding the bullion metal. Meanwhile, the precious metal’s support from coronavirus downside risk, global growth worries and geopolitical tensions are countered by a weaker investor interest.

Global stock markets were mixed up on Thursday, which lends support near the lower levels. 

Gold prices are expected to trade sideways ahead of the US GDP index data and Initial Jobless Claims.

Technical levels

The gold prices continue to struggle near the $1,800 mark lately. Broadly speaking, prices are under selling pressure below the $1,830 level on the daily chart. XAU/USD slips below the 50-day Simple Moving Average (SMA) on Thursday, which could prompt more downside movement in prices.

The formation of a ‘Spinning Top’ on August 24, followed by a  red candle portrays a perfect picture of the beginning of fresh downward price action in gold.

XAU/USD daily chart

The Moving Average Convergence Divergence (MACD) remains neutral in the oversold zone.  A downtick in the MACD indicator would confirm the downside momentum. 

A sustained break below the $1,780 would make the journey toward the south for the prices toward the yearly low levels achieved on August 9 at $1,687.78

XAU/USD additional levels