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  • According to Chicago Federal Reserve President Charles Evans, the US economy is not out of the woods yet. 
  • The gold price forecast remains bullish above a double bottom support level of 1,792 today.
  • Forex trading market participants may buy above the $1,802 level to target $1,814.

Gold prices were closed at $1796.55 after placing a high of $1803.20 and a low of $1785.65. Gold found a little support and turned its momentum on the upside after recovering some of its little loss from previous days. After trading bearish for four consecutive sessions, gold reversed its course on Thursday. On Friday, the gold price forecast remains bullish above a double bottom support level of 1,792 today.

If you are interested in trading XAU/USD with forex robots, check out our guide.

The weakness in the US dollar underpins gold prices.

The US Dollar Index (DXY), which measures the greenback’s value against a basket of six major currencies, fell on Thursday. It reversed its direction after dropping to 92.3. The US Treasury yield on a 10-year note also fell to as low as 1.28%. Thus, it added weight to the US dollar. The weak US dollar then added support to the yellow metal.

The US dollar was lower on the day, but the data released from the Labor Department showed that the new jobless claim benefits fell to the lowest level in nearly 18-months last week. This offered more evidence that labour shortages delayed job growth rather than cooling demand for workers.

A Quick Economic Events Review

For July, consumer credit declined to 17.0B from the anticipated 24.5B. It weighed on the US dollar and added to gains in the yellow metal. The US Unemployment Claims from last week dropped to 310K against the forecasted 343K, which supported the US dollar and limited the upward momentum in gold prices.

According to Chicago Federal Reserve President Charles Evans, the US economy is not out of the woods yet. The challenges like supply chain and labour market bottlenecks remain there despite the strong economic recovery and the vaccine’s promise.

Evans continued that a common element that has not been left was the high uncertainty related to new variants of the coronavirus. Thus, it has impacted the country’s health and safety.

Fed Governor Michelle Bowman Remarks on the Job Report

The US Federal Reserve Governor, Michelle Bowman, came out in front. She said the weak August jobs report would not throw off the central bank’s developing plan to trim its $120 billion in monthly bond purchases later this year.

She said that there was robust economic growth even though the recent data was less intense than expected. Furthermore, the goal of maximum employment was not far away, and a series of critical jobs data could provide ways to start scaling back asset purchases this year.

These signals from the US Federal Reserve policymakers suggest that the US central bank remains on track. The US is trimming its massive asset purchases this year despite the slowdown in jobs growth in August and the impact of the resurgence in COVID-19 cases that kept supporting the US dollar. Thus, it limited the gains in precious metals.

Meanwhile, markets also eyed the European Central Bank’s policy decision to trim emergency bond purchases. This provided some support to the European currency, a competitor to the US dollar, adding weight to the greenback and, as a result, yellow metal gained traction in the market.

Gold Price Forecast
XAU/USD Daily Chart

Gold Price Forecast – Daily Support and Resistance

1787.06 1804.61

1777.58 1812.68

1769.51 1822.16

Pivot Point: 1795.13

Gold Price Forecast – 50 EMA to Extend Resistance at 1,802

On Friday, the gold price forecast remains bullish above a double bottom support level of 1,792 today. On the 4 hour timeframe, gold faces immediate resistance at 1,802 level, which is being extended by 50 periods exponential moving average. A breakout of the 1,802 level is likely to extend a buying trend until the next resistance level of 1,815. An additional break out of the 1,815 level can expose gold prices towards the next resistance level of the 1,832 level.

In contrast, gold may find immediate support at the pivot point level of 1795. However, a bearish breakout below this level could extend the selling trend until the next support levels of 1,787 and 1,777.

Taking a look at the 50 period EMA (exponential moving average – red line), it is holding around the 1,801 level. The closing of candles below this level supports a selling bias in the precious metal, gold. Furthermore, the leading indicator, Stochastic RSI, remains above 80, indicating that gold is overbought.

Therefore, Forex trading market participants may buy above the $1,802 level to target the $1,814. Alternatively, traders can take a sell position below the $1,801 level today. All the best!

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