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  • The Federal Reserve has set its target of the inflationary rate at approximately 2%.  
  • The global case count of the COVID-19 infections topped 198.1 million, along with 4.2 million deaths.  
  •  Forex trading  market participants may sell below $1,816 to target the $1,801 and $1,794 levels.

On Monday, the yellow metal gold edged lower as the greenback held steady, with traders eyeing monthly U.S. jobs data to gauge the labor market’s health. Gold price forecast remains bearish as the XAU/USD broke below the intraday pivot point level of $1,808.

Federal Reserve Keep CPI Target at 2% – Gold Supported  

The Federal Reserve has set its target of the inflationary rate at approximately 2%; however, this year, due to pandemic and slow economic recovery, Fed adjusted its mandate to let the inflation run hotter than the target and achieve maximum employment.  

However, the latest data from the U.S. showed that inflation might be running hotter than the expectations of the Federal Reserve as the inflation based on CPI was at 5.4%, and the PCE Price Index also came in double the target set by the Fed.

This week, Jerome Powell acknowledged the faster pace of inflation this year than what he and other officials predicted. He also said that inflation could turn out to reach even higher levels and might remain persistently higher than the levels they had expected.  

The Federal Reserve continued to maintain that the current inflationary rates were transitory as the accelerated prices were only the result of the reopening of the U.S. economy. Fed thinks that much of the inflationary pressure was due to supply bottlenecks. He further said that once these bottlenecks decrease, the economy will start returning to normal.

Concerns Over Gold’s Demand from China Keep Metal Bearish

Speaking about China, gold’s second-biggest consumer, the factory activity grew in July at the weakest pace in 17 months. It’s due to bad weather conditions and increased cost of raw material. Therefore, it triggered concerns about gold’s demand from China. Lack of demand can cause a surge in gold supply in the market, and as per the law of supply, its price can drop lower.  

COVID-19 Infections Topped 198.1 Million, Gold Supported

Top U.S. contagious disease specialist Dr. Anthony Fauci notified on Sunday that “things are going to get worse” with a surge in virus cases, mainly amongst the unvaccinated. On the coronavirus front, the global case count of the COVID-19 infections topped 198.1 million, along with 4.2 million deaths. Beijing increased its efforts to control coronavirus spread and suspended many flights, trains, and buses from regions with a rising number of coronavirus cases.

The greenback was high on board as the DXY reached 92.20 level. It gathered its strength back that capped further gains in XAU/USD. The U.S. dollar was elevated as the U.S. Federal Reserve backed the hopes. That interest rate will not be raised anytime sooner.

Gold XAU/USD Forecast – Technical Levels: Major Support at $1,794

Gold Price Forecast
Gold – XAU/USD- 4 -Hour Chart

Support Resistance

1794 1833

1775 1847

1758 1864

Pivot Point: 1816.38

Gold Price Forecast – Daily Technical Analysis: Pivot Point Breakout

Gold price forecast remains bearish below the $1,816 resistance level. On Friday, the precious metal gold traded pretty much in line with my previous  Gold Price Forecast, July 30, 2021.

Gold prices failed to break above the double top resistance level of $1,833 level. Closing of candles below this level triggered a sell-off in gold, and now it’s trading at the $1,807 level. On Monday, gold has violated the intraday pivot point level of $1,816 level.

On the 4-hourly chart, the yellow metal exhibits a bearish crossover below 50 periods EMA (Exponential Moving Average – Red Line). The EMA was extending support at 1,814 levels, but this level has now been violated. Below this, gold has strong chances of a bearish trend continuation until 1,801.  

Additional breakout in gold can lead the gold price towards the next support level of 1,794. This level can be a real hurdle for gold sellers as it’s been tested several times, and sellers never got to violate it.  

However, a breakout of 1,794 level can extend the selling trend until the $1,775 level. The oscillator indicator Stochastic has entered the oversold zone, which means closing any reversal candles above $1,801 or $1,794 can bring buying in gold. Therefore, the  Forex trading  market participants may sell below $1,816 to target the $1,801 and $1,794 levels. Conversely, buying limit can be placed around $1,794 level today. All the best!

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