Gold Price News and Forecast: XAU/USD eyes $1980 amid weaker dollar

FXStreet Team FXStreet

Gold Price Forecast: XAU/USD eyes $1980 amid weaker dollar, focus shifts to Wednesday’s FOMC

Gold (XAU/USD) built on Monday’s 1% rally after a steady start on Tuesday, reaching fresh nine-day highs at $1967. The US dollar was dumped across the board amid an improvement in the risk-sentiment, courtesy of the vaccine hopes, upbeat Chinese data and renewed US-Sino trade optimism. The Chinese activity numbers came in stronger than the estimates, suggesting the economic recovery is gathering steam. Also, news that China extended tariffs exemptions on some of the US good imports further fuelled the market optimism.

Gold Price Analysis: Nears descending triangle resistance

Having jumped 0.89% on Monday, gold is now closing on the upper end of the four-week-long descending triangle pattern seen on the daily chart. A close above the triangle resistance, currently at $1,970, would imply revival of the broader uptrend and expose the record high of $2,075 reached on Aug. 7. On the way higher, the yellow metal may encounter resistance at $$1,992 (Sept. 1 high) and $2,016 (Aug. 18 high).

A breakout looks likely as the MACD histogram has charted higher lows, a sign of weakening of downward momentum. On the downside, the triangle support at $1,909 is the level to beat for the bears. At press time, gold is trading near $1,955 per ounce.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.