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  • Looking forward, market traders will keep their eyes on the European Central Bank (ECB) ‘s latest policy decision. 
  • On Thursday, the gold price forecast remains bullish above a double bottom support level of 1,784 today. 
  • Forex trading market participants may buy above the $1,785 level to target the $1,801.

During Thursday’s Asian trading session, the yellow metal price failed to stop its previous three consecutive days of a downward rally. Thus, it dropped to a near two-week low of around 1,788.44. The yellow metal came under a fresh round of selling pressure due to a stronger greenback and a hawkish Fed member’s stance. The gold price forecast remains bullish above a double bottom support level of 1,784 today.

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The stronger US dollar continues to weigh on gold.

The US dollar was strengthened by the market’s downbeat sentiment and climbed to one-week highs. This, in turn, was seen as one of the critical factors that acted as a headwind for dollar-denominated commodities and prompted fresh selling on the day. 

Alternatively, the ongoing market risk-off sentiment, triggered by the persistent coronavirus risk, uneven global economic recovery, and cautious stance of major central banks, could help bullion prices limit their deeper losses. 

The Fed’s tapering chatter and economic fears amid Covid-19 further bolstered gold’s bearish bias. This may give further help to gold prices to cap their losses. The gold price is trading at 1,790.44 and consolidating in the range between 1,802 – 1,784. For the moment, traders seem cautious about placing any strong positions ahead of the European Central Bank  (ECB) ‘s latest policy decision.

Risk-off Sentiment Triggered amid Covid-19 Fear & Stimulus Chatters

The global equity market failed to stop its previous long downward performance. It remained depressed as investors are worried about the combination of slowing global growth and the potential tapering of central bank stimulus. 

Meanwhile, the escalating Delta COVID variant concerns raise doubts over the global economic recovery. It’s putting further downside pressure on the market’s trading sentiment. Moreover, it’s evident from a weaker tone around the equity markets and extended some support to the traditional safe-haven US dollar.

Australia recorded the second day of increased COVID cases, while China also marked an uptick in the COVID-19 numbers. In addition to this, the US, Germany, and the UK also marked an increase in daily covid cases on the previous day. 

US President Joe Biden’s six-pronged strategy in Play

Apart from the worsening coronavirus conditions, the doubts over US President Joe Biden’s six-pronged strategy. The US diplomat’s confused opinion on Jerome Powell’s reappointment as the Fed Chairman weighs the market trading sentiment.

Moreover, the signals from Republicans and some of the Democratic Party members to offer a bumpy road to the US stimulus also destroyed the market trading mood. As a result, S&P 500 futures fell 0.17% intraday, but 10-year Treasury yields in the United States remained unchanged.

US dollar’s upward rally continues to drive selling in gold.

On the USD front, the broad-based US dollar maintained its previous-day upward rally. It remained well bid as the market’s risk-off mood tends to underpin the US dollar due to its safe-haven allure. 

Meanwhile, concerns that the resurgence of COVID-19 cases could derail the economic recovery took their toll on global risk sentiment. This extended some further support to the traditional safe-haven US dollar. This, in turn, was seen as one of the key factors that acted as a headwind for dollar-denominated commodities and prompted fresh selling on the day.

What’s next?

Looking forward, market traders will keep their eyes on the European Central Bank (ECB) ‘s latest policy decision. The ECB is broadly expected to dial back the Pandemic Emergency Purchase Programme (PEPP). Apart from this, the weekly US job figures, updates concerning the coronavirus, and the US stimulus may also entertain gold traders.

Gold Price Forecast
XAU/USD Daily Chart

Gold Price Forecast – Daily Support and Resistance

S3 1741.36

S2 1772.41

S1 1783.46

Pivot Point 1803.46

R1 1814.51

R2 1834.51

R3 1865.56

Gold Price Forecast – Double Bottom Pattern Underpins at $1,784

On Thursday, the gold price forecast remains bullish above a double bottom support level of 1,784 today. On the 4 hour timeframe, it’s heading north towards the next resistance area of 1,801. Gold has failed to break below the double bottom support level of 1,784 levels.

On the bullish side, gold is likely to face immediate resistance at the 1,801 level. whereas a breakout of the 1,801 level can extend the buying trend until the next resistance area of the 1,814 level.

In contrast, the breakout of 1,784 support levels can trigger a selling trend until the next support level of 1,773 is reached. Taking a look at the 50 period EMA (exponential moving average – red line), it is holding around the 1,806 level. The closing of candles below this level supports a selling bias in the precious metal, gold. Moreover, the leading indicator, Stochastic RSI, stays below 50, keeping the bearish trend in gold.

Therefore, Forex trading market participants may buy above the $1,785 level to target the $1,801. Alternatively, traders can take a sell position below the $1,801 level today. All the best!

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