Gold Price Forecast: XAU/USD risks further falls as technical setup turns bearish
Premium|You have reached your limit of 5 free articles for this month.
Get all exclusive analysis, access our analysis and get Gold and signals alerts
Elevate your trading Journey.
UPGRADE
- Gold price testing bearish commitments amid mixed market mood.
- Growing inflation concerns counter stronger US economic data.
- Gold to remain at the mercy of the risk trends and dollar dynamics.
Gold price (XAU/USD) retreated sharply from five-month highs of $1917 and finished Tuesday at $1900, as stronger US economic data pointed to a strengthening recovery. The optimism over the US economy lifted the Treasury yields alongside the dollar, as the Fed’s tapering bets resurfaced. US ISM PMI showed a pick up in the manufacturing activity in May. However, growing concerns over higher price pressures continued to overwhelm investors, which kept a floor under gold price. Eurozone inflation exceeded ECB’s target range last month, which is likely to spell trouble for the central bank any time soon.
Gold price extends Tuesday’s weakness into early Europe this Wednesday, pressured by a broadly firmer US dollar while covid concerns in Asia continue to cushion the downside. Looking ahead, if the risk-off mood intensifies, the US dollar is likely to catch a fresh bid wave, exacerbating the pain in gold. Meanwhile, an uptick in the Treasury yields, amid a potential revival of the risk-on trades, could also exert downside pressure on the yiedless gold. The metal will remain at the mercy of the dynamics in the dollar and yields, taking cues from the broader market sentiment, in absence of relevant US macro news.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold’s four-hour chart confirmed a rising wedge breakdown earlier this Wednesday, following a sustained break below the rising trendline support at $1900.
Gold price is challenging critical 50-simple moving average (SMA) support at $1895, below which a sharp sell-off towards the bullish 100-SMA at $1873 cannot be ruled out.
The Relative Strength Index (RSI) shows that the tide has turned in favor of the bears, as it has pierced through the midline to now trade in the bearish region.
Alternatively, acceptance above powerful support turned resistance at $1901 is critical to negate the downside bias in the near term.
The next stop for the buyers is seen at the $1910 round number.
- Gold price testing bearish commitments amid mixed market mood.
- Growing inflation concerns counter stronger US economic data.
- Gold to remain at the mercy of the risk trends and dollar dynamics.
Gold price (XAU/USD) retreated sharply from five-month highs of $1917 and finished Tuesday at $1900, as stronger US economic data pointed to a strengthening recovery. The optimism over the US economy lifted the Treasury yields alongside the dollar, as the Fed’s tapering bets resurfaced. US ISM PMI showed a pick up in the manufacturing activity in May. However, growing concerns over higher price pressures continued to overwhelm investors, which kept a floor under gold price. Eurozone inflation exceeded ECB’s target range last month, which is likely to spell trouble for the central bank any time soon.
Gold price extends Tuesday’s weakness into early Europe this Wednesday, pressured by a broadly firmer US dollar while covid concerns in Asia continue to cushion the downside. Looking ahead, if the risk-off mood intensifies, the US dollar is likely to catch a fresh bid wave, exacerbating the pain in gold. Meanwhile, an uptick in the Treasury yields, amid a potential revival of the risk-on trades, could also exert downside pressure on the yiedless gold. The metal will remain at the mercy of the dynamics in the dollar and yields, taking cues from the broader market sentiment, in absence of relevant US macro news.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
Gold’s four-hour chart confirmed a rising wedge breakdown earlier this Wednesday, following a sustained break below the rising trendline support at $1900.
Gold price is challenging critical 50-simple moving average (SMA) support at $1895, below which a sharp sell-off towards the bullish 100-SMA at $1873 cannot be ruled out.
The Relative Strength Index (RSI) shows that the tide has turned in favor of the bears, as it has pierced through the midline to now trade in the bearish region.
Alternatively, acceptance above powerful support turned resistance at $1901 is critical to negate the downside bias in the near term.
The next stop for the buyers is seen at the $1910 round number.
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.