The Gold Price Forecast: The XAU/USD pair is likely to suffer fresh selling pressure after failing to hold the $1,642 level
Gold (XAU/USD) retreats to the $1,659 area. A break below $1,642 would clear the way towards the $1,620-$1,615 region.
There is no question that the $1,662 area will now act as a pivotal point in the Gold XAU price
A sustained move above the $1,662 area, which coincides with the 38.2% Fibonacci retracement level of the recent fall from the monthly peak, could trigger a fresh bout of short-covering moves and lift spot prices to the $1,676-1,678 supply zone, which would be a major rallying point.
There is a 50% Fibo in the latter case. There is a resistance level as well as the 100-period SMA on the 4-hour chart, which if cleared decisively will indicate that the XAU/USD is forming a bottom in the near term.
As a result, the bulls will be able to aim back for a retake of the $1,700 round figure mark in the near future and, in turn, set the stage for a further near-term appreciation movement.”
“The 23.6% Fibonacci retracement level. It now appears that a barrier, around the $1,642 area, seems to be protecting the immediate downside.
There is a possibility that any subsequent decline will find support near the $1,620-1,615 region or the YTD low if a further decline occurs.
Gold is expected to fall towards the $1,600-$1,590 area if a convincing break below is a new trigger for bearish traders.
It seems that some follow-through selling will pave the way for the market to extend the downward trajectory towards the $1,567-$1,565 intermediate support, en route to the $1,530-$1,528 region and the psychological mark of $1,500.
The XAU/USD is cushioned by $1,650 after a corrective move following a strong US GDP report
The gold price (XAU/USD) is experiencing a healthy correction following a bumper rally during the previous session.
Due to the fact that the downside bias is not backed by momentum, it is expected that the precious metal will find significant bids around the immediate cushion of $1,650.00.
Consequently, after the conclusion of the pullback move, it is expected that the precious metal will resume its upward movement.
This mild correction in gold prices has been caused by the less-confident pullback in the US dollar index (DXY) which explains the reason for the mild correction in gold prices.
It is important to note that the DXY plunged as a result of its inability to hold above the critical hurdle of 144.50.
It appears that the DXY has reached its peak at this time, parallel to the peak in interest rates at 4.6% set by the Federal Reserve (Fed).
It is worth mentioning that the Fed’s interest rate peak isn’t too far from the current interest rate levels at 3.-3.325 percent after an examination of the constant velocity of raising interest rates over the past few years.
An analysis of the gold market
As measured on an hourly basis, gold prices are declining towards the horizontal support placed from Monday’s high of $1,649 on an hourly basis.
It is expected that the price of the precious metal will capitalize on the above-mentioned horizontal support in the near future since it is declining gradually.
This will indicate a change in polarity and the bright metal will display a more firm impulsive move following the change in polarity.
There is a strong uptrend in the yellow metal at $1,641, which indicates that the short-term uptrend is still intact as long as it remains above the 50-period Exponential Moving Average (EMA).
As the bright metal has slipped below the 200-EMA at $1,655, it is expected that it will be able to recapture it sooner rather than later.
It has been observed that the Relative Strength Index (RSI) (14) is oscillating in a positive range of 60-80, which indicates that there is more upside to come.
There is also a possibility that the momentum oscillator may find support at 60.00 as well.
Historically, it has been expected that the Federal Reserve will maintain its terminal interest rate at 4.6% for a more extended period of time until it finds a slowdown in the price pressures for several months to come.
Investors will keep a close eye on the US Gross Domestic Product (GDP) data that is expected to be released on Thursday.
Based on the preliminary estimates, it seems likely that the annualized US GDP will continue its trend of de-growth for this quarter by 0.6%.