- US Dollar Index surged to its nine-and-half month high level during an early trading session at 93.73.
- Gold price forecast remains neutral as the metal is struggling to break out of the trading range of 1,795 – 1,772 level.
- Forex trading market participants may buy above the $1782 level to target the $1,801 and $1,809 levels.
Gold prices closed at $1784.00 after reaching a high of $1791.0 and a low of $1780.0. The yellow metal continued its depressed momentum on Friday for the 4th consecutive session and posted a loss for the day amid the strength of the US dollar. The gold price forecast remains neutral as the metal is struggling to break out of the trading range of 1,795 – 1,772 level.
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Stronger Dollar Keeping Gold Under Pressure
The US Dollar Index surged to its nine-and-half month high level during an early trading session at 93.73. However, during late trading hours, the DXY started declining after facing selling pressure and turned red for the day to close at 93.50.
At the same time, the US Treasury Yield on the 10-year note rose and reached 1.267%, which kept supporting the US dollar and weighed on the yellow metal. There was no macroeconomic data from the US side to be released on Friday. Thus, the precious metal followed the market trend and US dollar movements and remained under consolidation.
The continued worries over a spike in coronavirus cases that could disrupt the outlook of the global economy kept supporting the yellow metal. However, the rising prices were limited after investors sought the US dollar as a haven rather than gold.
Fed Tapering Hints at Weights on Gold Prices
The near-term outlook for gold is showing mixed trends as safe-haven inflows support gold. But on the other hand, the hints about tapering by the Federal Reserve keep gold under pressure. If the Fed keeps on reiterating tapering, it could weigh heavily on gold prices as the US dollar was already strengthening and US Treasury Yields were rising on the back of taper talks.
Apart from the taper talks, the US dollar was also high because of the safe-haven interest. The US dollar index reached its 9-and-a-half-month high level, limiting gold’s momentum as bullion became more expensive for other currency holders.
Covid-19 & Gold Updates
According to data compiled by Johns Hopkins University, the average daily fatalities reached over 1000 in the United States. Moreover, the average weekly cases surpassed one million amid the continuous spread of the Delta variant of the coronavirus. The global case count reached 211.6 million, and the death count passed 4.4 million this week.
Worries about the economic outlook once again came under headlines after the spread of the Delta variant increased. The deadly variant forced Australia and New Zealand to review their strategies for eliminating coronavirus infections. The PM of Australia even said that it was doubtful that his country would ever return to zero cases.
Meanwhile, Indonesia extended its lockdown measures and saw an ease in the daily infection count. Whereas the German minister said, there would be no more lockdowns.
Iran reported a new record of daily deaths with 684. France announced plans to accelerate the student vaccination rate, South Korea ordered more than 7 million Moderna doses, and Thailand reported increased spending on helping to fight the coronavirus.
All these developments worldwide to fight the coronavirus kept the safe-haven appeal high in the market, and investors preferred the US dollar for its safe-haven status over the precious metal and, hence, gold remained depressed.
Furthermore, the spotlight was also shifted to the Fed’s annual get-together next week in Jackson Hole, Wyoming, which is expected to shed further light on the monetary strategy and timeline, and it also kept gold prices under pressure.
Gold Price Forecast – Technical Levels
Support Resistance
1777.96 1783.16
1775.78 1786.18
1772.76 1788.36
Pivot Point: 1780.98
Gold Price Forecast – Daily Technical Analysis: Symmetrical Triangle Intact
The technical side of gold hasn’t changed a lot since my previous gold price forecast, August 19 update. On the 4-hourly timeframe, the upward trendline is extending support at the 1784.05 level. The closing of candles over this has the potential to trigger a bounce-off.
The metal continued trading with a neutral inclination as it could not release itself from a symmetrical triangle pattern. This pattern renders resistance at 1,790, and a bullish breakout could prolong the buying course to 1,801 and 1,812 marks.
On the bearish front, the breakout of $1784.05 may present the following support at a 61.8% Fibonacci retracement level of $1,773. Presently, the 50 day EMA (exponential moving average – red line) is also operating at around the $1784 level, showing support for gold’s upward trend.
Moreover, the leading indicator, Stochastic RSI, is held in a selling zone. Thus, the traders are confused and are waiting for a breakout of the 1,795 – 1,772 trading range. Therefore, the Forex trading market participants may buy above the $1782 level to target the $1,801 and $1,809 levels. Alternatively, selling trades can be seen on a bearish breakout below the 1782 level today. All the best!
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