Gold Price Forecast: XAU/USD remains vulnerable, downside favored

Gold is alternating between gains and losses so far this Tuesday amid a recovery in the risk sentiment. Focus remains on yields as XAU/USD eyes a pennant breakout, FXStreet’s Dhwani Mehta reports.

Gold is teasing a pennant breakout on the 4H chart

“Fed Chair Jerome Powell’s testimony on the CARES act, Evergrande updates and the dynamics in the Treasury yields will play out, impacting gold price action.”

“As observed on the four-hour chart, XAU/USD is wavering in a pennant formation, with a breakout expected in either direction in the session ahead. With the Relative Strength Index (RSI) still lurking below the midline, the odds of a downside breakout from the pennant look higher.”

“A powerful resistance awaits at $1754, which could emerge as a tough nut to crack for gold bulls. Acceptance above the latter is needed to rekindle a fresh upswing towards the 50-SMA at $1759. The next relevant upside target is seen at the September 23 highs of $1777.”

“Gold sellers look to challenge the rising trendline (pennant) support at $1747. A sustained break below the latter will validate the pennant breakdown, opening floors for a retest of the six-week troughs of $1738, below which the falling trendline support at $1735 would be put to test.”